The Government of Bangladesh and the Asian Development Bank (ADB) today finalized four loan agreements totaling US$1.304 billion to bolster critical infrastructure, fortify financial systems, and accelerate the nation’s efforts to combat climate change.
The agreements were officially signed by Md Shahriar Kader Siddiky, Secretary of the Economic Relations Division (ERD) under the Ministry of Finance, and Hoe Yun Jeong, Country Director of the ADB’s Bangladesh Resident Mission. Senior officials from both sides were present at the signing ceremony.
The newly secured funds are set to deliver tangible improvements across key sectors vital for Bangladesh’s continued development.
A significant portion of the package includes a US$500 million budget support for the “Stabilizing and Reforming the Banking Sector Program-Subprogram 1.” This initiative, developed by the Finance Division, aims to enhance financial stability through structural improvements, ensuring stronger credit systems that can fuel economic growth.
The program, implemented by the Finance Division, Bangladesh Bank, and Financial Institutions Division, targets two major policy reform areas: maintaining the financial sector’s stability and resilience amidst ongoing economic challenges, and implementing structural reforms to position banks effectively for providing credit. This loan is repayable over 15 years, including a 3-year grace period, with an interest rate of SOFR+0.5%.
Another US$400 million in budget support is allocated to the “Climate Resilient Inclusive Development Program-Subprogram 2,” designed to reduce Bangladesh’s vulnerability to climate shocks. This comprehensive program involves collaboration across numerous government bodies, including the Finance Division, Programming Division-Planning Commission, Bangladesh Bank, and various ministries such as Water Resources, Power, Road Transport and Highways, Disaster Management and Relief, Railways, Environment, Forest and Climate Change, and Agriculture.
The program’s key policy reform areas include facilitating a sustainable and climate-focused development pathway, strengthening resilience and reducing risk and vulnerability to adverse climate change impacts, and mitigating greenhouse gas emissions while transitioning to a low-carbon economy. This loan has a 25-year repayment period, with a 5-year grace period and an interest rate of 2%.
The agreements also include US$204 million for Tranche 4 of the SASEC North West Corridor Phase 2, which will be utilized to improve regional connectivity along the vital Elenga-Hatikumrul-Rangpur road. With this latest tranche, ADB’s total investment in this corridor since 2017 now stands at US$1.2 billion. The project is being implemented by the Roads & Highways Department under the Road Transport and Highways Division. This loan is repayable in 25 years, including a 5-year grace period, with an interest rate of SOFR+0.5%.
Furthermore, a US$200 million energy modernization program is set to revolutionize Bangladesh’s power grid. This project will involve upgrading nine substations and constructing 141 kilometers of new transmission lines, while also creating pathways for integrating renewable energy from Southern Chattogram. Power Grid Company of Bangladesh PLC will implement this “Power Transmission Strengthening and Integration of Renewable Energy Project” until June 2030. This loan, under ADB’s Ordinary Operations, aims to improve the quality, reliability, and efficiency of Bangladesh’s power supply system. Its key components include modernizing power infrastructure, integrating renewable energy, and building institutional capacity. The loan carries a 25-year repayment period with a 5-year grace period and an annual interest rate based on SOFR +0.5%.
