Bangladesh Secures $400M AIIB Loan for Climate Development

In FY 2023-24, Bangladesh repaid $6.078 billion in foreign loans, a 27% increase from $4.779 billion in FY 2022-23. By the first half of FY 2024-25, total foreign debt surpassed $80 billion. The government secured new loan commitments exceeding $2 billion, with $3.26 billion disbursed.

As of January 2025, 69% ($354 million) of ADB-financed loans for agriculture, food, nature, and rural development in Bangladesh remained undisbursed, the highest among sectors. Overall, 41% ($4.84 billion) of ADB’s total $11.79 billion portfolio remained undisbursed, while 19% ($2.35 billion) was uncontracted.

Bangladesh is now expected to receive the fourth and fifth tranches of the $4.7 billion IMF loan together in June, instead of earlier projections for March. The fourth tranche, initially scheduled for February 10, amounts to $645 million, while the fifth tranche is expected to be around $530 million.

The Asian Infrastructure Investment Bank (AIIB) is lending Bangladesh $400 million under its Climate Policy-Based Financing (CPBF) for infrastructure development in climate-critical sectors. Co-financed by the Asian Development Bank (ADB), the funding will be utilized in the 'Climate Resilient Inclusive Development Programme (Sub-programme 2)', implemented by multiple government divisions.

The Asian Development Bank (ADB) will provide up to $1 billion in budget support to Bangladesh by June, contingent on several reforms. Of this, $500 million is allocated for banking sector reforms, requiring a reduction in private bank directors' tenure and number, reversing amendments made between 2013-2023 under political pressure.

Foreign loan disbursement in Bangladesh surged to $3.53 billion during July-December FY25, with $2 billion received in December alone. Major contributors included the ADB ($1.05 billion) and World Bank ($800 million).