B Mirror Report: The Asian Development Bank (ADB) will extend $1 billion in budget support to Bangladesh to help the country manage economic pressures arising from the ongoing US-Israel war against Iran. Officials at the Economic Relations Division (ERD) said the funds are expected to be disbursed between May and June under two separate budget assistance programmes.

During a recent meeting with ERD Secretary Shahriar Kader Siddiky, ADB Country Director Hoe Yun Jeong confirmed the funding and assured that both programmes would be processed quickly. Last fiscal year, the ADB provided Bangladesh with $1.5 billion in budget support through three programmes.

ERD officials said the Middle East conflict has created uncertainty for Bangladesh, particularly regarding oil and LNG supplies. Rising international fuel prices and supply chain disruptions have increased import costs, putting pressure on the economy and foreign exchange reserves. In response, the government has sought budget support from development partners, with ADB assistance forming a part of this effort.

Under the “Strengthening Economic Management and Governance Program Subprogram 2 (PBL),” the initial allocation of $500 million has been increased to $750 million due to the prevailing situation. Additionally, the ADB will provide $250 million under the “Second Strengthening Social Resilience Program  Subprogram 2 (PBL).”

A senior ERD official, speaking anonymously, said the government is also in discussions with other development partners, including the World Bank, JICA, the Asian Infrastructure Investment Bank (AIIB), the European Investment Bank (EIB), and South Korea, to secure further budgetary support.

Prime Minister’s Chief Economic and Planning Adviser Rashed Al Titumir recently stated that Bangladesh is seeking around $2 billion from multilateral institutions to address energy security concerns amid global fuel price hikes. Bangladesh Bank Governor Md Mostaqur Rahman also mentioned plans to secure $2 billion in loans to support the balance of payments, while Deputy Governor Md Kabir Ahmed Khan expressed hope for a $1.5 billion tranche from the IMF in June. Remittance inflows are projected to rise by up to $2.5 billion this fiscal year, strengthening foreign exchange reserves.

ERD officials said development partners provide budget support contingent on the fulfilment of reform conditions. To secure ADB financing, the Finance Division is preparing a policy matrix in consultation with the lender. Bangladesh may also seek about $500 million from the World Bank, with preliminary assurances already received. Discussions with AIIB include a proposed $400 million package.

Since the post-Covid period and the Russia Ukraine war, Bangladesh has received a total of $14.49 billion in budget support from development partners, with the highest allocation of $3.44 billion in FY25.

Experts have emphasised the urgent need for clear macroeconomic assessment to identify pressures in the balance of payments, including rising import costs, declining export earnings, and potential shocks to remittance inflows. Fiscal pressures are expected to intensify due to lower revenue collection, rising subsidies, and increased social protection spending.

Fahmida Khatun, Executive Director of the Centre for Policy Dialogue, said timely and adequate budget support is essential to ease economic pressures, stabilise energy supply, and maintain macroeconomic stability, noting that the $1 billion from ADB is a positive start but may not be sufficient given Bangladesh’s daily energy requirements.