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The Financial Express

Prospect of receiving soft ADB loans dims

| Updated: August 28, 2022 08:08:53


Prospect of receiving soft ADB loans dims

Bangladesh's performance in major sectors has not improved in latest Asian Development Bank (ADB) assessment, officials say, thus weakening its prospect of receiving concessional funds from the lender.

The country has been placed in the same rank this year as two years ago in the ADB-prepared country performance assessment (CPA), which might affect the concessional loan inflow, they told the FE Friday.

The Manila-based development financier recently assessed Bangladesh's country performance based on 16 categories, like monetary and exchange-rate policies, fiscal policy, debt policy and management, financial sector, business-regulatory environment and transparency, accountability and corruption in the public sector.

Among the 16 categories, four saw slight improvement in 2022 while the rest 12 maintained the same rank as was two years before in 2020.

"Bangladesh's performance has not improved in most of the categories over the last two years. The ADB helps its member-countries based on the CPA," says a senior Ministry of Finance (MoF) official, quoting the Asian bank's CPA.

He feels that since the ADP provides performance-based allocation for its member-countries, Bangladesh's concessional aid inflow could shrink over next two years.

"However, we will request the Manila-based lender to extend its support as Bangladesh government has taken lot of reform initiatives in its tax, fiscal and monetary policies," the MoF official says.

According to the ADB assessment, the monetary and exchange-rate policies scored 5.0 in the current year, 2022, same as in 2020.

Similarly, the country's fiscal policy scored 4.5, debt policy and management scored 5.5, trade 4.0; the financial sector 4.0; the gender equality 4.5; the equity of public resources management 4.5, building human resources 4.5, policies and institutions for environmental sustainability 4.0, quality of public administration 4.0, property rights and rules-based governance 4.0, and the quality of budgetary and financial management 4.0 in both the years (2020 and 2022).

However, Bangladesh's rank in few categories has been upgraded to some extent in the ADB's latest CPA.

The efficiency in revenue mobilisation scored 4.5 in 2022 from its earlier position of 4.0, social protection and labour secured 4.5 in the current year over 4.0 in 2020, transparency, accountability and corruption in the public sector scored 4.0 in 2022, up from the earlier level of 3.5 in 2020, and business regulatory environment scored 4.0 in 2022 from its earlier position of 3.0 two years back.

When asked, a senior MoF official said Bangladesh had been passing through a bad time, like other countries across the globe, for the last two year due to impacts of Covid pandemic, Russia-Ukraine war.

"Within those frameworks, the country's CPA rank may not have improved to an expected level. But we are hopeful of getting extended support in 2023-2024 cycle," he hopes.

The ADB is one of our best development partners which have been extending helping hand with billions of dollars in assistance since 1972, he notes.

The CPA 2022 should not be a barrier to increased aid flow into Bangladesh in the future years too, the MoF official says.

In the last fiscal year, 2021-22, the ADB emerged as the largest development partner of Bangladesh having confirmed US$2.08 billion worth of assistance.

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