The Bangladesh government is in talks with the Asian Infrastructure Investment Bank (AIIB) for a $700 million loan under the Climate Policy-Based Financing (CPBF) initiative, according to sources within the Finance Division.
This initiative is set to be the first in a series of two subprogrammes aimed at implementing coordinated and sequenced reforms, with a strong emphasis on climate-critical sectors. The goal is to integrate climate change adaptation and mitigation strategies, the sources said.
AIIB proposed $400 million in financing for the Water Resilience and Climate-Smart Urban Service Delivery Programme (Sub-programme 1) for FY26-FY27 and $300 million for the Climate-Resilient Inclusive Development Programme (Sub-programme 2) for FY25-FY26.
The programme aims to support Bangladesh in executing policy and institutional reforms while expanding its fiscal capacity to fund climate investment priorities outlined in national climate plans. The focus will be on water resources, including resilience and security, as well as urban development, encompassing urban resilience, municipal governance and finance, water supply, sanitation, solid waste management, and housing.
The proposed CPBF programme, in collaboration with the Asian Development Bank (ABD), builds on the success of the Climate-Resilient Inclusive Development Programme (Sub-programme 1). This new initiative aims to further advance policy reforms established under Sub-programme 1, with a focus on integrating climate change adaptation and mitigation measures to ensure sustainable, resilient, and inclusive growth for Bangladesh.
The programme will target key reform areas, including enhancing the enabling environment for climate change action, strengthening climate change adaptation efforts, and accelerating climate change mitigation strategies.
Sources indicated that additional budget support is essential to stabilise the macroeconomic situation in light of the ongoing global crisis and rising prices of essential commodities. As part of this effort, the government is seeking a loan from the Asian Infrastructure Investment Bank (AIIB).
Climate change has been posing significant challenges in Bangladesh for some time, including natural disasters, rising sea levels, salinity intrusion, and extreme weather events, all of which threaten the country's development trajectory.
Earlier, the ADB provided $500 million in budget support to the Bangladesh government under the “Sustainable Economic Recovery Programme (SERP)”. The funds are being disbursed in two tranches, with each tranche amounting to $250 million.
The disbursement of the first $250 million under Sub-programme 1 has already been completed, and activities under Sub-programme 2 are currently underway.
