Dhaka:Bangladesh has entered into a $450 million financing agreement with the World Bank aimed at bolstering the country's financial sector. This initiative seeks to enhance the sector's safety net, improve supervisory capabilities, and support the restructuring of the banking sector.
According to Bangladesh Sangbad Sangstha, the agreement was formalized under the 'Financial Sector Support Project II' between the Government of Bangladesh and the International Development Association (IDA), the concessional lending branch of the World Bank, on October 30. The agreement was signed by Economic Relations Division (ERD) Secretary Md. Shahriar Kader Siddiky and World Bank Division Director for Bangladesh and Bhutan Jean Pesme.
The project is set to receive 328 million Special Drawing Rights (SDR), equivalent to $450 million, and will be implemented from July 1, 2026, to June 30, 2031. The Bangladesh Bank will oversee the project under the guidance of the Financial Institutions Division (FID) of the Ministry of Finance.
The terms of the financing include an annual interest rate of 1.5 percent on the withdrawn credit balance, with a maximum commitment fee of 0.50 percent per annum on the undisbursed financing balance. Notably, the World Bank has waived this commitment fee for Bangladesh for several years, including the current fiscal year.
The financing agreement comes with a 25-year maturity period, which incorporates a five-year grace period. The World Bank continues to be Bangladesh's largest multilateral development partner, providing support across various sectors, including economic and social development, institutional reforms, infrastructure development, and energy sector advancement. This agreement underscores the ongoing collaboration between Bangladesh and the World Bank in fortifying the nation's financial and institutional frameworks.