$1.5b aid to boost banking, climate, energy sectors
Staff Reporter :
Bangladesh is set to receive over $1.5 billion in financial support from the Asian Development Bank (ADB) and the World Bank to reform its banking sector, boost climate resilience, and enhance energy and environmental infrastructure, at a time when the country continues to grapple with foreign exchange shortages.
The ADB on Wednesday approved a total of $900 million in loans for Bangladesh. Of this, $500 million has been allocated to stabilise and reform the banking sector, while $400 million will support climate-resilient and inclusive development under the second phase of the Climate-Resilient Inclusive Development Programme (CRIDP).
The $500 million policy-based loan aims to enhance governance, improve asset quality, and increase stability in the financial system. In a statement, the ADB noted that the programme would improve Bangladesh Bank’s liquidity management, strengthen financial supervision, and address the persistent issue of non-performing loans.
“The main constraints facing the banking sector include weak asset quality, limited liquidity, and insufficient financial intermediation, which contribute to low levels of financial inclusion,” said Sanjeev Kaushik, Principal Financial Sector Specialist at the Manila-based lender.
In parallel, the World Bank has approved $640 million in loans for two key infrastructure projects-one focused on improving the country’s gas supply and the other on enhancing air quality.
The $400 million ADB loan under CRIDP is intended to help Bangladesh accelerate its climate adaptation measures, reduce emissions, and promote inclusive growth. The programme includes co-financing of $113 million from Agence Française de Développement (AFD) and an additional $400 million from the Asian Infrastructure Investment Bank (AIIB).
“This initiative will help Bangladesh meet its climate goals more effectively by ensuring coordinated action across government agencies, aligned with national policy frameworks,” said Sameer Khatiwada, Senior Public Sector Economist at the ADB.
“It will also streamline access to climate finance, strengthen adaptive capacities in key sectors, and speed up mitigation efforts.”
As part of CRIDP, the government will establish the Bangladesh Climate Development Partnership to secure climate financing and support ministries in planning, implementing, and monitoring climate-related projects.
The programme also includes revising Dhaka’s Strategic Transport Master Plan (2025-2034) and monitoring renewable energy targets under the Integrated Energy and Power Master Plan, aiming to foster greener urban mobility and cleaner power generation.
Bangladesh remains one of the most climate-vulnerable countries globally. According to recent studies, continued high greenhouse gas emissions could lead to a loss of up to one-third of the country’s GDP by 2070. Tropical cyclones already inflict an estimated $1 billion-or 0.7 percent of GDP-in damages annually.
Severe flooding could reduce economic output by up to 9 percent by 2050 compared to baseline projections. By mid-century, the country may lose as much as 17 percent of its land area and 30 percent of its food production capacity, posing serious risks to food and nutritional security.