Bangladesh First Recovery and Resilience DPC

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The development objectives of the First Recovery and Resilience Development Policy Credit in Bangladesh are to: (i) strengthen fiscal and financial sector policies to sustain growth; and (ii) enhance resilience to future shocks, including climate change. The Development Policy Credit (DPC) supports policy reforms to ensure a robust recovery from the COVID-19 pandemic, to sustain economic growth, and to enhance resilience to future shocks, including climate-change. The tariff modernization component of Pillar A is critical to reach the growth and poverty reduction objectives of the 8th FYP, and to ensure continued market access in the context of LDC graduation. The DPC supports the transition from trade taxes to consumption and income taxes to help finance growth-enhancing public investments. The DPC supports public procurement efficiency by expanding the use of electronic government procurement (e-GP), a system which has already contributed estimated annual government savings of US$1.1 billion. Expanding the use of e-GP in emergency situations such as pandemics and natural disasters will enable time-critical delivery of services, with greater transparency. In Pillar B, financial sector reforms reflect government commitments in the 8th FYP to improve the depth and resilience of financial intermediation to finance private investment, accelerate growth, including through strengthening banking sector oversight and developing capital market instruments. In Pillar C, the DPC supports measures to strengthen shock resilience and address climate change. It builds on the recent expansion of social protection programs during the COVID-19 pandemic, supporting the Government as it seeks to expand programs to reach all poor and vulnerable members of society. The energy actions of the DPC contributes to Bangladesh’s climate objectives, following the submission of enhanced Nationally Determined Contributions in 2021 and cancellation of investments in coal-fired electricity generation in favor of increasing use of renewable energy, which will also reduce fiscal risks from potential stranded assets.

World Bank Group

Project

Power Generation (CCGT), Government