The Asian Development Bank (ADB) has granted a $400 million loan to Bangladesh, marking the second subprogram of the Sustainable Economic Recovery Program initiated in October 2021. The loan aims to drive reforms in domestic resource mobilization, enhance the efficiency and productivity of public spending, and provide accessible and affordable bank financing to small businesses, particularly those led by women.
ADB Principal Public Management Economist for South Asia, Aminur Rahman, emphasized that this subprogram will enable Bangladesh to bolster its revenues, promote transparency and efficiency in public spending and procurement, and implement vital reforms in state-owned enterprises. Additionally, it will facilitate access to low-interest credits from the banking sector for microentrepreneurs and small businesses. Rahman further highlighted the program’s commitment to gender equality, climate change, and digitization, supporting the government’s initiatives to generate income for the impoverished and vulnerable segments of society.
Under this program, income tax collection will be strengthened through the adoption of the new Income Tax Act, reducing tax loopholes and enhancing compliance and enforcement measures. The country’s tax net will also be expanded. Transparency and efficiency in public procurement will be promoted through the enhancement of electronic procurement and payment systems. Furthermore, the digital system for public project appraisal and approval processes will streamline the approval of public projects.
The loan package aligns with the innovative financing services recently introduced by the Bangladesh Bank, which enable commercial banks to offer low-cost microcredit through digital channels and e-wallets. This will facilitate access to finance for marginalized and landless farmers, small traders, and low-income earners. Micro and small businesses, as well as women entrepreneurs without substantial assets, will also be able to secure financing based on their trade receipts and other non-fixed collateral, such as small equipment and machinery.
The program places significant emphasis on promoting gender equality, social inclusion, and addressing climate change concerns in public investment and national budgeting. ADB remains committed to fostering a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while continuing its efforts to eradicate extreme poverty.
By approving this loan, ADB aims to support Bangladesh in its ongoing recovery efforts, enabling the country to implement critical reforms, foster economic growth, and empower small businesses, particularly those led by women, in the post-Covid-19 era.
