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BSS
  25 Sep 2021, 17:35

ADB approves $250m loan for Bangladesh Economic Recovery Program

  DHAKA, Sept 25, 2021 (BSS) - The Asian Development Bank (ADB) yesterday

approved a $250 million policy-based loan to support Bangladesh's economic
recovery following the COVID-19 pandemic.

  This is the first sub-program of the programmatic $500 million Sustainable
Economic Recovery Program.

  The objective of the Sustainable Economic Recovery Program is to facilitate
a rapid and sustainable recovery from the COVID-19 pandemic, generate
employment, and expand economic activities for micro-entrepreneurs and small
businesses.

  This will be pursued through policy reforms that will create fiscal space
to enhance public expenditure and support the recovery and growth of cottage,
micro, small, and medium-sized enterprises (CMSMEs), said a press release.

  The loan will support the government's planned public investment in
education, health, social protection, and infrastructure and help to
stimulate economic activities and economic recovery.

   It is also aligned with the core objectives of the country's Eighth Five-
Year Plan and supports the aspiration of Bangladesh to become an upper
middle-income country by 2031.

  "The fiscal space created under the program will allow the government to
prioritize expenditures and upscale investment in social and economic
infrastructure," said ADB Principal Financial Management Specialist
Srinivasan Janardanam.

  "The program is expected to increase the efficiency in public investment
management and create a favorable environment for access to credit,
particularly for the poor and vulnerable." added Srinivasan.

  To promote fiscal sustainability, the program will help the government
address two key constraints to public investments in critically needed
physical and social infrastructure.

  These are - low domestic resource mobilization and inefficient use of
public resources. The program aims to expand the tax base, improve compliance
and strengthen enforcement, rationalize tax exemptions, and modernize tax
administration.

  The COVID-19 pandemic has also severely impacted micro-entrepreneurs and
small businesses in the country.

  Enhancing access to credit for CMSMEs will lower borrowing costs, protect
this important segment of the economy, support inclusive growth, and absorb
the demographic dividend.

  The program will widen access to finance for women entrepreneurs,
particularly those running CMSMEs, by introducing or modifying refinancing
programs and credit guarantee schemes with an earmarked portion for women
entrepreneurs.

  The program will also encourage more women-led start-ups by earmarking 10
percent of new start-up financing for them.

  ADB's support coincides with the finalization of Bangladesh's Eighth Five-
Year Plan and the launch of the new ADB country partnership strategy for
Bangladesh, 2021-2025.

  The policy-based loan program reaffirms ADB's commitment to the Bangladesh
economy. ADB provided a $500 million countercyclical support facility
(pandemic response option) in 2020, towards immediate budgetary support to
the economy in the wake of the COVID-19 pandemic to part-finance incremental
health, social and economic expenditures by the government.

 

 

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