The Asian Development Bank (ADB) on Saturday approved a $250 million policy-based loan to support Bangladesh’s economic recovery following the COVID-19 pandemic.
The Board of Directors of the Manila-based lender has approved the $250 million loan, the first sub-programme of the programmatic $500 million Sustainable Economic Recovery Program, ADB said.
Now the ADB will sign a loan deal with the Bangladesh government soon for confirming its disbursement, officials said.
The assistance will help Bangladesh to facilitate 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), the ADB said in a statement.
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.
“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 favourable environment for access to credit, particularly for the poor and vulnerable.”
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.