World Bank lends $450 million for financial sector reform, agreement signed
The World Bank is lending $450 million to strengthen the safety net and supervisory capacity of the country's financial sector. The money will be used to implement the 'Financial Sector Support Project-2'. A loan agreement on the matter has been signed between the Government of Bangladesh and the World Bank's International Development Association (IDA).
According to a press release, the agreement was signed on Friday at the Economic Relations Division (ERD) of the Ministry of Finance. ERD Secretary Md. Shahriar Kader Siddiqui signed for Bangladesh, while Jean Pesme, the World Bank's division director for Bangladesh and Bhutan, signed for the bank.
Under the agreement, Bangladesh will receive 328 million Special Drawing Rights (SDR), equivalent to about $450 million.
The project will be implemented over five years, from 1 July 2026 to 30 June 2031. Bangladesh Bank will implement the project.
The project's main goals are to strengthen the financial sector's safety arrangements, increase oversight of financial institutions, and support the restructuring of the banking sector.
Under the terms of the agreement, interest of 1.5 percent per year will be payable on the drawn amount, while a commitment fee of up to 0.50 percent may be charged on undrawn funds. The loan will be repayable over a total of 25 years including a five-year grace period — that is, after the grace period following disbursement ends, it will be repaid in instalments.
The World Bank is Bangladesh's largest multilateral development partner. It finances Bangladesh across economic and social development, institutional reform, infrastructure, energy and other sectors.
