BSS
  22 Jun 2024, 17:49

Bangladesh receives $900m WB financing to increase economic, urban resilience

DHAKA, June 22, 2024 (BSS) - The World Bank (WB)'s Board of Executive

Directors yesterday approved two projects totaling US$900 million to help
Bangladesh strengthen fiscal and financial sector policies and improve urban
infrastructure and management to ensure sustainable and climate-resilient
growth.

"Decisive reforms will help Bangladesh sustain growth and strengthen
resilience to climate change and other shocks," said Abdoulaye Seck, World
Bank Country Director for Bangladesh and Bhutan.

"These new financing operations will help Bangladesh in two critical areas--
the financial sector and urban management-- to achieve its vision of upper
middle-income status," he added.

The Second Recovery and Resilience Development Policy Credit ($500 million)-
the last in a series of two credits-supports fiscal and financial sector
reforms to accelerate sustainable growth and build resilience to future
shocks, including climate change, said a press release.

The programme supports the transition from trade taxes to consumption and
income taxes, which will help Bangladesh strengthen competitiveness and
prepare for LDC graduation.

It will help institutionalize the public procurement authority responsible
for the electronic government procurement (e-GP system), which will cut down
the average e-GP procurement lead time from 70 days to 55 days.

It supports stronger banking sector oversight and improved management of
National Savings Certificates.

It will also help improve the efficiency and targeting of cash-based social
protection programmes and scales up public and private climate adaptation and
mitigation investments.

"A well-functioning financial sector is critical for Bangladesh to increase
investment and improve access to finance for those left out of formal banking
systems," said Bernard Haven, World Bank Senior Economist and Task Team
Leader for the programme.

"The government has adopted strong macroeconomic reforms to address external
imbalances and a new legislative framework to strengthen the financial
sector," Haven added.

The financing will help streamline the bank recovery framework, implementing
a prompt corrective action framework to address undercapitalized banks.

It will also bolster social protection programs, safeguarding the most
vulnerable during economic downturns and natural disasters.

The Resilient Urban and Territorial Development Project ($400 million) will
help improve climate-resilient and gender-responsive urban infrastructure and
urban management capacities in seven city clusters along the economic
corridor covering over 950 kilometers of the highway from Cox Bazaar, in the
south of Bangladesh to Panchagarh, in the north of the country Bangladesh.

In 2021, about 38% of the country's population lived in urban areas. This
number is projected to rise to 60 percent by 2050.

The trend of urbanization has largely been driven by the rapid growth of
manufacturing sector jobs in the Dhaka metro area, making Dhaka one of the
most densely populated cities in the world.

Climate resilient development in secondary cities will help absorb climate
migrants while helping reduce congestion in Dhaka.

The project prioritizes coordinated investment in infrastructure and planning
across these cities, ensuring a holistic approach compared to individual city
plans.

The project will help provide investments to support the development of
strategically important corridors and city clusters. It will help create
jobs, enhance rural-urban linkages and transition, and strengthen food supply
chains, and link to domestic markets and global value chains.

It will improve connectivity between the selected cities and surrounding
Union Parishads by improving roads and bus terminals and also create new
economic opportunities by enhancing facilities for tourism, open spaces, and
others.

The infrastructure designs will incorporate the needs of female users and
green building features including rainwater harvesting. "This will be the
first in a series of projects helping build resilience to climate change and
create new opportunities and jobs in secondary cities through spatially
targeted investments," said Kwabena Amankwah-Ayeh, World Bank Senior Urban
Development Specialist and Task Team Leader for the project.

"Developing secondary cities as growth hubs will be critical for the
country's sustainable growth." Kwabena added.

Selected municipalities and city corporations will receive subgrants for
investing in climate-resilient and gender responsive infrastructure. The
selected cities will be able to increase revenues by 20pc.

They will form Town-Level Coordinating Committees, where at least one-third
of the members will be women.
 
The World Bank was among the first development partners to support Bangladesh
following its independence. Since then, the World Bank has committed about
$41 billion in grants and interest-free credits to Bangladesh.

In recent years, Bangladesh has been among the largest recipients of the
World Bank's interest-free credits.

 

 

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