The World Bank’s Board of Executive Directors 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.”
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, according to a World Bank press
release.
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.
In 2021, about 38% of the country’s population lived in
urban areas. This number is projected to rise to 60% 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.”
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 20%.
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.