ADB pledges $9.46 billion for next three years

The Asian Development Bank (ADB) has committed to provide Bangladesh an estimated $9.4 billion loan in the next three years to help the country continue its post-pandemic recovery and deal with impacts stemming from global uncertainties.

Bangladesh will get more than $3 billion on average each year under the Bangladesh lending pipeline 2023-2025 in communication by the Manila-based bank to the Economic Relations Division (ERD) on 24 July.  

In the previous pipeline for 2022-2024, the lending amount that the ADB proposed stood at $7.91 billion.

ERD and ADB officials said the ADB has agreed to give loans for 44 projects under the lending pipeline and prepared a list of confirmed projects, which was finalised after consulting different government agencies.

According to the Bangladesh Country Programming Mission (CPM) report-2022, the ADB will provide support for continued improvement of the country's key infrastructures. 

Roads and railway corridors' development with necessary reforms will be supported to facilitate inter-regional trade, provide better access to the market and job opportunities, and increase private sector investment opportunities, it noted. 

The ADB will also provide integrated solutions to climate change mitigation and adaptation. 

Opportunities for energy efficiency and renewable energy will be explored to accelerate clean energy transition, the report also said, adding that the ADB will support mass rapid transit and e-vehicle development to achieve sustainable transport. 

The development partner will provide funding for projects on a priority basis under six sectors.

The transport sector will get the highest $2.9 billion from the three-year lending pipeline, followed by education and health $2.35 billion, water and urban $1.39 billion, finance $1.3 billion, energy $1.07 billion, agriculture $441 million, according to Bangladesh Lending Pipeline 2023-2025.

The ADB will provide funding for a few road and rail projects in the next three years. For example, it will give $300 million for the Akhaura-Laksam Double Track Project in 2023.

For another project, "Conversion of Tongi-Bhairab-Akhaura metre-gauge double track into dual-gauge double track", the development partner has also kept its funding for 2023 as standby. 

The ADB says it hopes to complete all processes and provide a loan for this project in 2023. 

The government has already started work on converting rail lines into dual gauge double lines on Dhaka-Chattogram route. A 72km long Akhaura-Laksham section is part of it, which has so far made more than 85% progress in June this year.

On the other hand, work on the Dhaka-Tongi dual gauge double line is going on. 

The ADB will also give $400 million for the Dhaka-Chattogram PPP Highway Project.

The ADB is helping Bangladesh design the new expressway to boost trade and ease congestion on the existing highway linking these cities. 

The project will assist the government in updating the feasibility study, preparing the detailed engineering documents and the expressway project for financing under a private-public partnership scheme, and procurement.

The ADB will lend $700 million for Dhaka-Northwest Corridor Road Project in two consecutive years, while it will give $100 million on the development of Dhirasram Inland Container Depot in Gazipur in 2023.

The Dhaka Mass Rapid Transit Development project (Line 5 Southern Route), SASEC integrated Trade Facility Project, and a few others will also get funding from the lending pipeline.

Under the education and health sector, the ADB will provide $500 million as support for the healthcare improvement project. The global lender will give $300 million for vaccine production and regulatory upgradation.

The ADB has also promised to give $250 million for Second Strengthening Social Resilience Program.  

For skill development, it will lend $600 million in two years alongside providing support for the development of next generation secondary education.

Moreover, under the sustainable economic recovery programme, the ADB will provide Bangladesh $250 million in budget support in 2023.   

Budget support under the climate change strengthening programme amounts to $500 million, which will be released in two tranches in 2023 and 2025. 

The global lender will also give $250 million to Bangladesh under a programme titled "Strengthening Economic Structure for LDC Graduation" in 2025.

The ADB has two types of lending conditions: soft loans are given from ordinary capital resources (concessional) at a fixed 2% rate, while in the case of lending from ordinary capital resources (regular), the interest is determined based on Secured Overnight Financing Rate plus contractual spread (0.5%).

The repayment tenure for both types is 25 years with a 5-year grace period. There is also a commitment charge of 0.15% on an undisbursed amount. 

Dr Mustafa K Mujeri, former director general of Bangladesh Institute of Development Studies, told The Business Standard, "We need such concessional loans all the more, which will help our economy make a turnaround from the present situation. We have to implement projects as fast as possible to get the intended benefits."