The World Bank has proposed loans worth $2.77 billion for ten major projects in Bangladesh, urging the government to approve them by December 2025. The push comes ahead of the February 2026 national elections, after which a 90-day moratorium on policy decisions will limit new project approvals.
According to a letter from Jean Pesme, World Bank Division Director for Bangladesh and Bhutan, the bank stressed the need for faster approvals under the International Development Association’s 21st Replenishment (IDA21). The proposed projects cover critical sectors including water, health, transport, digital transformation, and employment recovery.
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Key initiatives in the pipeline include the Financial Sector Support Project-2 ($400 million), Metro Dhaka Water Security and Resilience Program ($350 million), Dhaka Metro Line 2 Institutional Strengthening ($70 million), and a $500 million budget support loan under the Jobs and Growth DPC. Other projects include digital service transformation, strengthening health emergency response, informal sector employment recovery, and a $500 million guarantee for fuel imports.
However, Bangladesh’s allocation under IDA21 is lower than in the previous cycle. While IDA20 stood at SDR 2.45 billion, the IDA21 preliminary allocation is SDR 2.18 billion – about 15% less. For the first time, part of Bangladesh’s core IDA loans will carry market-based floating interest rates, capped at 5%, alongside a 25-year maturity and five-year grace period. Fixed-rate loans remain an option, but they would reduce allocations further.
Economists note that Bangladesh’s shift from IDA Gap to IDA Blend status means concessional financing will decline, but new opportunities will open through the International Bank for Reconstruction and Development (IBRD). Though borrowing costs will be slightly higher, they remain significantly lower than bilateral or commercial loans.
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The World Bank has assured Bangladesh of SDR 2.18 billion under IDA21’s three-year cycle (July 2025–June 2028), with final allocations to be confirmed at the bank’s annual meeting in Washington next month. Officials at the Economic Relations Division believe timely approval will be crucial to securing the proposed financing, especially with the election-related time constraints.