Written by The Banking Post
The government has moved to fast-track the release of $500 million in budgetary support from the Asian Development Bank as it grapples with a widening fiscal deficit in the current financial year.
Officials said the funds are being sought under an ongoing policy-based reform programme and are expected to provide short-term fiscal relief while advancing longer-term structural reforms. The Economic Relations Division has asked the Manila-based lender to complete its evaluation quickly so the money can be disbursed to the treasury at the earliest.
The request relates to the second tranche of the Strengthening Economic Management and Governance Programme, a policy-based lending facility tied to a set of economic and institutional reforms. In December 2024, the lender approved the first tranche of $600 million under the same programme.
That earlier financing was part of a broader $1.1 billion budget support package, which also included $500 million from the World Bank.
A senior ERD official said the urgency reflects mounting fiscal pressure in FY26, with the budget deficit projected at around Tk 2.26 trillion. Although domestic borrowing has increased to meet financing needs, external support from multilateral lenders remains critical to maintaining macroeconomic stability and easing pressure on foreign exchange reserves.
The proposed $500 million is a policy-based loan, meaning disbursement depends on progress in agreed reform areas. Officials said the programme focuses on boosting domestic revenue through digitalisation of tax administration, improving transparency in public spending and state-owned enterprises, streamlining customs to support export competitiveness as Bangladesh nears LDC graduation, and strengthening institutions to curb corruption and improve the business climate.
The push for early disbursement follows a record year of engagement with the ADB. In 2025, the lender committed more than $2.57 billion in sovereign financing to Bangladesh, nearly double the previous year’s level.
Officials said negotiations with the ADB are expected in the coming days and expressed confidence that progress on prior reform conditions will help unlock the funds within the current fiscal quarter.
