WB approves major reform loan for Bangladesh

Staff Reporter :

The World Bank (WB) has approved $500 million in financing to support Bangladesh’s efforts to improve governance, enhance transparency, and strengthen corporate oversight in its financial sector.

The loan, provided under the ‘Strengthening Governance and Institutional Resilience Development Policy Credit’, is aimed at facilitating key reforms in the public and financial sectors – seen as essential to sustaining long-term economic growth and improving service delivery for vulnerable communities.

“Robust management of public finances is critical for Bangladesh’s sustainable economic development,” said Gayle Martin, World Bank Interim Country Director for Bangladesh. “This support will help the government build stronger institutions that are more open, accountable, and capable of delivering inclusive growth.

It complements another project approved last week that will aid the implementation of these reforms.”
Bangladesh currently has one of the lowest revenue-to-GDP ratios among middle-income nations, which restricts the government’s ability to provide quality public services.

The new programme will back initiatives aimed at boosting domestic revenue collection, streamlining tax policy, and modernising tax administration in line with global best practices. Among the key changes is a proposed requirement for all tax exemptions to receive Parliamentary approval – an important shift from the current ad hoc system.

The financing will also support measures to improve corporate governance, financial reporting, and risk management by aligning national standards with international benchmarks. The Bangladesh Bank will be granted enhanced powers to manage risks and resolve vulnerabilities in the banking sector – part of broader efforts to safeguard financial stability.

In addition, the reforms are designed to strengthen transparency and efficiency across the public sector. By 2027, all government project appraisal documents must be publicly available.

The government also plans to expand the use of electronic government procurement (e-GP), mandate the disclosure of beneficial ownership in public contracts, and eliminate price caps to promote competition and curb corruption.

The Office of the Comptroller and Auditor General will receive support to enhance its auditing capabilities, and the independence of the Bangladesh Bureau of Statistics will be reinforced to improve data transparency and governance.

Furthermore, the government aims to make social protection programmes more effective by implementing a dynamic social registry, which would improve the targeting of cash transfers to poor and vulnerable households – particularly during periods of economic disruption or natural disasters.

“This financing aligns with public demand for greater transparency and accountability,” said Dhruv Sharma, World Bank Senior Economist and Task Team Leader for the project. “Reforms in domestic revenue mobilisation, governance, and data systems will help ensure that public resources are allocated more efficiently, especially in times of crisis.”

With this latest approval, the World Bank’s total new commitments to Bangladesh for the 2024-25 fiscal year now stand at $3.07 billion. Since Bangladesh’s independence, the World Bank has committed over $46 billion in grants, interest-free loans, and concessional credits to the country.