The World Bank’s (WB) Board of Executive Directors on Friday approved two projects totaling $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,” said WB Country Director.
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 on Saturday (June 22).
The program 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 programs and scale 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 program. “The government has adopted strong macroeconomic reforms to address external imbalances and a new legislative framework to strengthen the financial sector.”
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 to Panchagarh in the north of Bangladesh, the release added.
