REJAUL KARIM BYRON

The government is considering sweeping financial and administrative reforms linked to three World Bank loan programmes worth $1.7 billion, including removal of a controversial clause from the Bank Resolution Act.

Finance ministry and Bangladesh Bank officials said multiple rounds of talks have taken place in Washington, DC and Dhaka, while a World Bank mission visited Dhaka this month to negotiate terms.

A key condition for a $500 million budget support loan is to scrap Section 18 (Ka) of the Bank Resolution Act, 2026, which would allow former owners of five merged Islamic banks to regain control. The WB has also pressed for legal steps to separate the National Board of Revenue’s policymaking and implementation functions.

Another component, the $400 million Financial Sector Support Programme II, requires amendments to the Bank Company Act, enactment of a Distressed Asset Management Act, and a 25 percent reduction in non-performing loans at state-owned banks.

Additionally, about $800 million is being repurposed from existing projects into direct budget support. Although no direct conditions have been set for the repurposing, progress on the two previously mentioned programmes will be necessary for fund release through repurposing, officials said.

Eight projects have been identified for repurposing, and officials expect funds by June once respective ministries complete technical procedures and send proposals to the WB.

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