NEW ADB LOAN TO SUPPORT FURTHER BANGLADESH CAPITAL MARKET REFORMS
DHAKA, Nov. 22 (NsNewsWire) — The Asian Development Bank (ADB) and the Government of Bangladesh today signed agreements for $250 million in loans to help Bangladesh continue capital market reforms which should boost private investment and support the country’s drive to achieve middle-income status by 2021.
Saifuddin Ahmed, Joint Secretary, Economic Relations Division (ERD), and Kazuhiko Higuchi, Country Director, Bangladesh Resident Mission of ADB, signed the agreement on behalf of Bangladesh and ADB respectively, at a ceremony at ERD, Sher-e-Bangla Nagar, Dhaka.
“ADB has been supporting the Government’s initiatives to improve capital markets, and this new assistance will help the government to strengthen the markets further,” said Country Director Kazuhiko Higuchi.
“The third program supports policy actions to strengthen the Bangladesh Securities and Exchange Commission, boost institutional investor demand, broaden the supply of financial instruments, including sukuk, and promote a more liquid government bond market.”
In the Seventh Five Year Plan, the government is targeting to achieve annual gross domestic product (GDP) growth of 8% in the fiscal year 2020. Achieving this goal will require attracting more private investment. Further development of the capital markets is an important catalyst trowards that end.
The ADB-supported Second Capital Market Development Program helped stabilize the Bangladesh stock market after a turmoil in 2010 and supported the passage of key financial sector legislation.
The third program will strengthen the Bangladesh Securities and Exchange Commission and support the establishment of a clearing and settlement company. It will also support new areas such as strengthening the Insurance Development and Regulatory Authority to promote the insurance industry’s growth and stability and encourage insurers to use the capital markets more. To increase the supply of high quality bonds and other market instruments, policy actions will draw up rules for Islamic finance, including sukuk, among other matters.
ADB’s loan will be complemented by technical assistance grant of $700,000 to support the implementation of key reforms including the installation of the ICT system. ADB will provide a $400,000 grant and it will administer a $300,000 grant from the Republic of Korea’s e-Asia and Knowledge Partnership Fund.
The program will be completed by the end of 2017.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.