Over $1bn in loans expected next week
Bangladesh is expected to receive more than $1 billion in budget support from the Asian Development Bank (ADB) and the International Monetary Fund (IMF) next week, which could bring some relief to the nation's dwindling foreign currency reserves.
A finance ministry official said a loan proposal of $400 million is likely to be placed at the ADB board meeting on December 12.
On the same day, Bangladesh's proposal to get the second tranche of the IMF's $4.7 billion loan, amounting to around $681 million, will also be placed at an IMF board meeting, the official said.
If both proposals are approved, a total of $1.08 billion will be added to Bangladesh's forex reserves.
The reserves have been gradually declining for the last one and a half years owing to higher import bills compared to moderate export and remittance earnings.
On November 29, the country's reserves as per IMF calculations stood at $19.4 billion, against $40.7 billion in August 2021.
The ADB, a Manila-based multilateral lender, took the initiative to support Bangladesh's climate risk mitigation and adaptation – including in the areas of renewable energy, energy efficiency and green transportation.
An ADB team already met with officials of the finance ministry and the Ministry of Environment, Forest and Climate Change to work out the conditions for funding.
The loan proposal was placed at the ADB after meeting all conditions.
One of the conditions pertained to arresting pollution of water bodies. An enforcement guideline must be drafted for polluters, complete with an environment court and penalty for pollution.
Similarly, a multi-sectoral action plan to control air pollution was drafted.
The government also has had to design a green energy policy.
State-owned enterprises will also have to adopt climate-related policies and the government was asked to come up with a solid action plan for the implementation of its Delta Plan 2100.
The General Economic Division will have a Delta wing and will monitor whether environmentally-friendly projects are being adopted by ministries and divisions.
The local government division will also have a cell for environmental risk identification and mitigation.
On Sunday, the IMF said in a statement that international financial institutions, bilateral donors, and the private sector announced a collaborative approach with the Bangladesh government to establish the Bangladesh Climate and Development Platform (BCDP).
The ADB was processing a $400 million policy-based loan to Bangladesh in 2023, it said.
In the statement, ADB President Masatsugu Asakawa said: "Climate risk is growing and addressing it requires progressive action and strong partnerships.
"With commitment and leadership, Bangladesh has made significant progress in advancing its climate agenda."
He added: "The National Committee for Environment and Climate Change will forge a whole-of-government approach to advance the climate agenda, and the BCDP will facilitate increased and coordinated support to Bangladesh.
"The ADB is firmly committed to working with all development partners to support Bangladesh in the fight against climate change."
About 53 percent of the ADB's 2023 project financing ($1.9 billion) has been allocated towards climate financing so far, and the lender said it is committed to earmarking more than half of its 2024-26 allocation for Bangladesh ($5.5 billion) in support of the climate agenda.