The Asian Development Bank (ADB) will provide a $600 million policy-based loan (PBL) to Bangladesh, with a package of structural reforms supporting the mobilization of domestic resources, efficiency of public investment projects, developing of the private sector.
It also focuses on reforming state-owned enterprises and promoting transparency and good governance, according to an ADB press release on Wednesday.
ADB Regional Lead Economist Aminur Rahman said: “ADB’s PBL promptly responds to Bangladesh’s immediate development financing needs following the political transition. The reforms target improvements in economic management and governance as well as economic diversification and competitiveness.”
He added: “ADB's program was developed in close collaboration with the International Monetary Fund, World Bank, and other development partners.”
Bangladesh has been struggling with revenue mobilization, as it possesses the lowest tax-to-gross domestic product ratio in the world, at only 7.4%. This PBL will help Bangladesh introduce key policy actions with the aim of increasing domestic resource mobilization, while improving transparency and accountability.
The program includes digitalization and green initiatives, rationalization of tax incentives and exemptions, and measures to assist taxpayers to boost tax morale.
Improved transparency and efficiency of public investment projects through increased digitalization is another key objective. The PBL promotes private sector development and foreign direct investment by streamlining regulatory environment and creating a level playing field. To simplify business creation and operations, over 130 services have been made available in an online integrated platform.
These are complemented by improved governance and performance monitoring of state-owned enterprises and streamlined foreign direct investment approval processes. The PBL also aims to facilitate policy and institutional reforms to promote a “whole of government” logistics sector reform to reduce the cost of trade and promote export diversification.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 69 members—49 from the region.
