ADB betting big on Bangladesh

Bangladesh was the third highest recipient of loans from the Asian Development Bank (ADB) last year, in further testament to the development partners’ enhanced opinion of the country.

Of the $21.58 billion pledged by the Manila-based multilateral lender, $2.20 billion went to Bangladesh, dwarfed only by the amounts received by India ($3.52 billion) and China ($2.62 billion), the two largest economies of the region.

The amount is the highest yet for Bangladesh from the ADB, which typically commits in the neighbourhood of $1.5 billion every year, according to a presentation during its 52nd annual meeting, which wrapped up yesterday.

In 2017 Pakistan was the third highest recipient of the ADB’s loans at $2.10 billion, but last year it dropped to $1.08 billion.

The ADB also arranges co-financing with other bilateral or multilateral development partners and in 2018 it arranged $35.81 billion for the Asia-Pacific nations, of which $4.48 billion went to Bangladesh -- the highest.

“If an economy is growing at 7-8 percent the whole world will come and invest,” said Hun Kim, ADB’s director general for South Asia operations.

So, funding will never be an impediment to Bangladesh’s growth ambitions, he said, adding that the ADB was willing to lend more provided the country was able to utilise it nimbly, effectively and with tangible end products.

The ADB offers mainly two kinds of loans. One of them carries concessional interest rate of about 2 percent and is of 25 years’ tenure with a five-year grace period. The other is at competitive rates connected to the LIBOR.

Between 2019 and 2021, the bank is planning to lend $8.1 billion, which is 65.31 percent more than in the previous three years.

About two-thirds of the 2019–2021 lending programme focuses on developing and improving infrastructure, according to the ADB’s internal documents.

Priority infrastructure support will go towards expanding power generation capacity, improving power transmission and distribution networks, supporting regional power interconnections, strengthening road, railway, and port connectivity; and improving urban infrastructure and services, water supply and sanitation. 

The programme will also pay attention to ensuring high-quality education and skills development with a renewed focus on science, technology and innovation; developing economic corridors and improving rural market connectivity and agribusiness infrastructure and flood and riverbank erosion management.

“Your capacity to implement mega projects or many projects is growing but that will be the main bottleneck. Money will never be a bottleneck,” Kim said.

Lengthy internal business processes often delay project approvals, while the limited capacity of the country’s few executing and implementing agencies often leads to delays in project implementation, said the ADB documents.

In 2018, the ADB conducted special initiatives to help strengthen the implementation capacity of the government, finance project preparatory works to improve project readiness and enhance technical design covering environment, land acquisition and involuntary resettlement. 

The ADB’s new procurement policy and regulations, rolled out and operationalised in 2017, are helping ensure faster procurement and consultant recruitment as well as simpler and more effective fiduciary systems throughout the project cycle, the documents said.

The ADB has been a development partner of Bangladesh since 1973, and established its first field office in Dhaka in 1982. Since 1973, the ADB has committed a total of $22.9 billion and financed 282 projects in the country.

Established in 1966, the ADB is owned by 68 members, 49 of which are from the region.