The Asian Development Bank (ADB) approved a $526 million multitranche financing facility (MFF) to help sustain and increase infrastructure investments in Bangladesh, particularly in financing public-private partnership projects as well as renewable energy interventions, says a press release.
The assistance consists of a $500 million market-based loan to finance medium and large-scale PPP infrastructure projects, and a $26 million concessional loan to finance small and medium-sized renewable energy and energy efficiency facilities, primarily in the rural areas of the country.
Both loans are under the Third Public-Private Infrastructure Development Facility (PPIDF 3).
A $750,000 technical assistance was also approved from the Financial Sector Development Partnership Fund to further strengthen the capacity of the Infrastructure Development Company Limited (IDCOL), a state-owned financial institution mandated by the Government of Bangladesh to promote and finance PPP projects.
"Infrastructure development is an integral part of Bangladesh's rapid economic growth, but it is undeniable that in order to sustain this growth, the country would need an increased investment in infrastructure that can be filled in by the private sector," Peter Marro, an ADB Principal Financial Sector Specialist, was quoted as saying on Tuesday.
"We hope to continue our contribution to the country's infrastructure development through PPIDF 3."
Bangladesh has recorded steady average growth of 6.3% between 2011 and 2015, enabling it to attain lower-middle income status in July 2015.
But real gross domestic product (GDP) growth would need to reach an average annual rate of 7.4% during the 7th Five Year Plan to move Bangladesh toward upper middle-income level, said the ADB statement.
Such targets, it said, will require a substantial increase in public and private investments from about 29% of GDP in 2015 to 34.4% by 2020.
The gap in infrastructure financing alone is estimated at between 5% and 6% of GDP or a shortfall of $9 billion to $10 billion a year.