Dhaka: The Government of Bangladesh and the Asian Development Bank (ADB) have signed four loan agreements totaling $1.304 billion. These agreements aim to modernize critical infrastructure, strengthen financial systems, and accelerate Bangladesh’s climate resilience efforts.
According to Bangladesh Sangbad Sangstha, the loan agreements were signed by Md Shahriar Kader Siddiky, secretary of the Economic Relations Division of the Ministry of Finance, and Hoe Yun Jeong, country director of the Bangladesh Resident Mission for ADB. Senior officials from both the Government of Bangladesh and ADB were present at the signing ceremony.
The agreements are expected to deliver improvements across key sectors. A $500 million loan for banking sector reforms is designed to fortify financial stability by implementing structural improvements to ensure stronger credit systems, thereby fueling economic growth. This program, called “Stabilizing and Reforming the Banking Sector Program-Subprogram 1,” will be carried out by the Finance Division, Bangladesh Bank, and Financial Institutions Division. The loan is set to be repaid over 15 years, including a 3-year grace period, with an interest rate tied to SOFR plus 0.5%.
Additionally, $400 million will be allocated to reduce vulnerability to climate shocks through the “Climate Resilient Inclusive Development Program-Subprogram 2.” This initiative will be implemented by multiple government divisions, including the Finance Division, Bangladesh Bank, and Ministry of Water Resources, among others. The program focuses on facilitating sustainable, climate-focused development, strengthening resilience to climate change impacts, and mitigating greenhouse gas emissions. The loan is repayable over 25 years with a 5-year grace period and a 2% interest rate.
A further $204 million is dedicated to tranche 4 of the SASEC North West corridor Phase 2, aimed at improving regional connectivity along the Elenga-Hatikumrul-Rangpur road. This brings ADB’s total investment in the corridor to $1.2 billion since 2017. The Roads and Highways Department will implement this project, with a repayment period of 25 years, including a 5-year grace period, and an interest rate of SOFR plus 0.5%.
Lastly, a $200 million energy modernization program will enhance Bangladesh’s power grid through the upgrade of nine substations and the addition of 141 km of new transmission lines. The project, implemented by Power Grid Bangladesh PLC, aims to improve the power supply system’s quality, reliability, and efficiency, while facilitating renewable energy integration from Southern Chattogram. This loan also carries a 25-year repayment period with a 5-year grace period and an interest rate based on SOFR plus 0.5%.