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Bangladesh and its Partners are Launching the Bangladesh Climate and Development Platform to Leverage Adaptation and Mitigation Investments

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Bangladesh and its Partners are Launching the Bangladesh Climate and Development Platform to Leverage Adaptation and Mitigation Investments







December 3, 2023















Dubai – December 3, 2023. The Asian Development Bank (ADB),
the World Bank, International Finance Corporation (IFC), Multilateral
Investment Guarantee Agency (MIGA), Asian Infrastructure Investment Bank (
AIIB), Agence Française de Développement (AFD), the European Union and the
European Investment Bank (EIB), as part of Team Europe, the Green Climate
Fund (GCF), the Government of South Korea, Japan International Cooperation
Agency (JICA), and the United Kingdom announced today a collaborative
approach to support a package of measures for Bangladesh aimed at enhancing
the nation’s ability to mitigate and adapt to the effects of climate
change.

[1]

This collaborative support will bolster Bangladesh’s efforts to address the
impact of climate change on vulnerable communities.

This partnership, the first of its kind in Asia, takes place in the context
of the $1.4 billion Resilience and Sustainability Facility (RSF)
arrangement approved by the International Monetary Fund (IMF)’s Executive
Board in January 2023, the programmatic series of Green and Climate
Resilient Development (GCRD) Policy Credits by the World Bank totaling $1
billion, and the ADB’s ongoing funding for climate projects in Bangladesh.

The RSF arrangement and the GCRD credits support reforms to strengthen
Bangladesh’s resilience to climate change, advance the decarbonization of
the economy, and manage transition risks.

[2]

Specific reforms supported by the IMF program and the GCRD aim to integrate
climate and green dimensions into public procurement and public planning,
incentivize locally led climate actions and scale up a national disaster
risk financing strategy. Other reforms include adopting a periodic
formula-based price adjustment mechanism for petroleum products, tackling
air pollution and GHG emissions, enhancing the efficiency and resilience of
water supply and sanitation services, and for Bangladesh Bank to update the
Policy on Green Bond Financing. These reforms and the collaboration with
partners are expected to create an enabling environment that will help
attract additional climate finance.

Bangladesh’s climate reform agenda: an innovative
approach to addressing climate change

Inter-ministerial and inter-agency coordination. Bangladesh
is one of the most vulnerable countries to the impact of climate change and
has been a forerunner in climate change adaptation and disaster risk
preparedness. To enhance government coordination, the Ministry of
Environment, Forest, and Climate Change (MoEFCC) has formed the National
Committee for Environment and Climate Change (NCECC) as an
inter-ministerial platform headed by the Prime Minister. The NCECC will
monitor implementation progress of the national climate strategies, provide
guidance on and solutions to the problems for implementing the strategies
and consider implementation of decisions taken at the United Nations’
conferences on climate change.


Development partners are pledging their support to the Government
of Bangladesh’s climate agenda in many ways:


Launching the Bangladesh Climate and Development Platform (BCDP).

The Government of Bangladesh (GoB) and its MDB and bilateral development
partners are setting up the BCDP to implement the country’s climate agenda.
The BCDP will generate a robust pipeline of climate projects, integrated
with a financing strategy. This integrated approach together with the
cooperation between the GoB and the partners is expected to integrate
climate risks into fiscal planning, improve the sensitivity of public
investment management to climate-related challenges, bolster
climate-related risk management for financial institutions including climate
stress testing, strengthen and institutionalize the monitoring and reporting
of climate-related spending, and fortify disaster risk reduction and
management.


Establishing a Project Preparation Facility under the BCDP.

To improve the bankability of priority projects, a multi-donor/multi-sector
project preparation facility will be established within the BCDP. This will
also support scalability to attract private investments across Bangladesh,
mainstreaming projects in development plans, while reducing the financial
burden on the public sector. The ADB along with the World Bank are preparing
the facility, which will enhance coordination jointly with other development
partners.

Policy-Based Lending ($1.85 billion). The
ADB is processing a $400 million policy-based loan to
Bangladesh in 2023. About 53 percent of the ADB’s 2023 project financing
($1.9 billion) has been allocated towards climate financing so far, and the
ADB is committed to allocating more than half of its 2024-26 allocation for
Bangladesh ($5.5 billion) in support of the GOB’s climate agenda. The
Korean Government also pledged $50 million in support of
the GOB’s climate agenda, and AIIB is considering the provision of an
additional $400 million in 2024 at the request of the
Government of Bangladesh.

World Bank funding towards sustainable development. The
World Bank’s $1 billion in Green and Climate Resilient
Development Policy Credit series financing is helping the country’s
transition to green and climate-resilient development.

[3]

The World Bank is also supporting Bangladesh’s alignment with Article 6 of
the Paris Agreement, to better access and utilize international climate and
carbon finance, through enhanced institutional arrangements and preparation
of the first Article 6 carbon market transaction. Through its engagement in
air quality management, the World Bank will finance pollution abatement
measures in key sectors such as energy and industry, which can also
generate carbon credits.

Improving access to climate finance.The UK, through its
Taskforce on Access to Climate Finance, will support improved coordination
of bilateral climate finance, as well as support to the Government of
Bangladesh to increase access to all sources of climate finance, building
on a country-owned programmatic approach to climate finance.

[4]

The GCF is supporting several

public and private sector projects, totaling over

$400 million, including national direct access entities and
in sectors such as energy, agriculture, water management and resilient
livelihood. In addition, several other multi-country programs, which
include Bangladesh, are in the GCF’s pipeline.

Bangladesh Renewable Energy Facility ($430.5 million). As
announced at the EU Global Gateway Forum on 25 October 2023, the European
Union and the EIB, as part of Team Europe, have committed to providing a
“Bangladesh Renewable Energy Facility,” consisting of an EU-guaranteed EIB
Loan of $381.5 million. This loan will support renewable
energy projects, which will contribute to a sustainable green transition of
Bangladesh’s power sector and to the achievement of the country’s climate
mitigation targets. The Renewable Energy Facility is expected to mobilize
up to $763 million in investments and to contribute to the installation of
an estimated 750 MWp of new renewable energy capacity in Bangladesh. The
EIB support will be accompanied by an EU Grant worth

$49 million,

including Technical Assistance ($6.5 million) and an Investment Grant
($42.5 million) provided under the EU Global Gateway strategy, as part of
the Team Europe Initiative on the Green Energy Transition.

Agence Française de Développement (AFD) is processing a~$320
million
climate policy-based loan program, aligned
and complementary to the IMF, WB, and ADB commitments. Since 2015, more
than 75 percent of AFD project financing provided to Bangladesh (over $1
billion) have been allocated to tackling climate change. This strong
commitment will continue in the coming years, in coordination with Team
Europe and local and international partners, in favor of the GOB’s climate
agenda.

Technical Assistance and Financing. JICA will support the
BCDP by enhancing its project pipelines aligning Bangladesh’s climate
change agenda through a combination of technical assistance, concessional
loans, and grants. In support of adaptation JICA’s work includes flood
control, river management, water supply, sanitation, fishery and food
security. Mitigation, infrastructure improvements, including renewables and
energy-saving technology introduction in line with the Integrated Energy
and Power Master Plan are priorities together with low-carbon urban
transportation and forest and natural resources management.

The United Nations Development Programme (UNDP) will continue providing
technical assistance to the GoB on strategic climate change-sensitive
planning and budgeting management, strengthened climate public finance
governance, and in more effective planning and budgeting for climate
finance at the local level. UNDP is also engaging with the GoB in the
analysis of possible bond solutions by providing technical support to
the Bangladesh Securities and Exchange Commission in designing a
Sustainable Development Goals Thematic Bond Framework, upgrading the
existing taxonomy, and in drafting an impact management and reporting
framework.

Private Sector Financing (~$610 million).Bangladesh is
currently receiving funding for nine private-sector climate projects with
contributions of $441.2 million from the GCF, $135.5 million from other
development partners, national implementing entities, and private banks,
and $33 million from the Government of Bangladesh. JICA will expand support
for Bangladesh’s green transition and green industrial diversification
through its direct financing facility to the private sector in addition to
concessional loans to the government. JICA signed a $90 million loan
agreement with BRAC Bank in early 2023 to support expanding its green
financing for projects aligned to the Sustainable Finance Policy set by the
Bangladesh Bank.

The IFC will deploy its own funds and crowd in other investors for climate
financing for the private sector of Bangladesh. Under this initiative, the
IFC will explore a platform approach to channel financing for both
mitigation and adaptation activities by deploying innovative structures on
risk sharing, currency hedging and performance-based incentives. MIGA will
leverage its rich experience in Bangladesh to provide investment guarantees
to mobilize foreign direct investments, especially in the renewable energy
sector, and help reduce the cost of climate finance.

Standard Chartered Bank (SCB), as the largest and longest-standing
multinational bank in Bangladesh, has been leveraging its local market
knowledge, innovation, and its robust green and sustainable product lineup
to introduce new products to support local clients in financing their
climate ambitions, launching the first local green bond and the first
sustainable letter of credit. SCB is fully committed to supporting climate
adaptation in Bangladesh, where $1 invested in adaptation can yield up to
$10 of economic benefits. SCB is also a leading provider of blended finance
solutions and has supported blended finance platforms across Asia.

Quotes:

Kristalina Georgieva, Managing Director of the International Monetary Fund,
said “Bangladesh has been at the forefront of those warning about the
elevated risks of climate change for vulnerable countries as well as
stressing the importance of international collaboration to support those in
need. Bangladesh is also making significant strides to bolster climate
resilience, adaptation, preparedness, and conservation. We commend
Bangladesh’s steadfast implementation of their climate agenda and their
tireless efforts to promote global collective action to address climate
change.”

Ajay Banga, World Bank Group President said “Increasing climate risk is
affecting the lives and livelihoods of millions of people in Bangladesh.
The country has demonstrated leadership in disaster preparedness and
adaptation. Today’s announcement once again shows Bangladesh’s strong
commitment in collaborating with international and local partners to
address climate challenges. The urgency is high, and we all need to work
together to share knowledge and provide financing to the countries that are
most vulnerable to the impacts of climate change.”

Masatsugu Asakawa, ADB President, said: “Climate risk is growing and
addressing it requires progressive action and strong partnerships. With
commitment and leadership, Bangladesh has made significant progress in
advancing its climate agenda. The NCECC will forge a whole-of-government
approach to advance the climate agenda, and the Bangladesh Climate and
Development Partnership will facilitate increased and coordinated support to
Bangladesh. ADB is firmly committed to working with all development partners
to support Bangladesh in the fight against climate change.”

Rémy Rioux, CEO of Agence française de Développement, said: “As one of the
world’s most vulnerable countries, Bangladesh has become a pioneer in
adaptation to climate change. Together with the Government of Bangladesh,
AFD is committed to tackle climate change for many years. The momentum
behind this package clearly demonstrates that only a coordinated response
can protect the population from climate-related disasters on a large scale.
We are proud of this innovative partnership with the IMF as part of the
Finance-in-Common movement.“

Werner Hoyer, President of the EIB stated: “As the EU’s Climate Bank, the
EIB is supporting the global transition to a low-carbon economy through
renewable energy investments. I am happy that we can join forces with
fellow international financial institutions and partners, like Bangladesh,
that are committed to accelerate this process and promote development
through climate action.”

Mafalda Duarte, Executive Director of the GCF noted: “The GCF is helping
Bangladesh build resilience and transition to low-carbon growth. We will
continue partnering with national and international entities to scale up
climate finance where it is most needed. The new climate development
partnership launched by Bangladesh’s government and partners is an excellent
model for mobilizing coordinated investments. This innovative collaboration
will help accelerate climate adaptation and resilience investments through
the Resilience and Sustainability Facility. The GCF fully supports this
model approach of aligning finance, technical expertise, and policy reforms
to implement Bangladesh’s climate strategies. We must work as one to turn
climate commitments into climate action on the ground.”

The Rt Hon Andrew Mitchell, Minister of State for Development and Africa in
the Foreign, Commonwealth and Development Office, said “As one of the most
vulnerable countries to the effects of climate change, it is vital that
Bangladesh has access to climate finance to mitigate the impacts of climate
change. Through the Bangladesh Climate Development Partnership – the first
of its kind in Asia – the UK will be working with global partners to
support the coordination and implementation of climate finance to build a
more sustainable and climate resilient future for Bangladesh.”

Naser Ezaz Bijoy, Chief Executive Officer, Bangladesh, Standard Chartered
Bank, said, “We’re delighted to be supporting this new climate partnership,
lending the wealth of Standard Chartered’s market experience and expertise
across blended finance, to scale up finance for adaptation and mitigation
in Bangladesh. Efforts across stakeholder groups are needed to accelerate
the transition to a low-carbon, nature-positive and climate-resilient
economy and we look forward to working with our cross-sector partners on
this project.”




[1]

These institutions and donors have been engaging on a long-standing
basis in providing financial and technical assistance in support of
Bangladesh’s efforts to enhance its climate resilience.


[2]

This cross-sectoral reform agenda has been informed by the World
Bank’s Country Climate and Development Report (CCDR) for
Bangladesh, completed in 2022.


[3]

Over the past decade, the World Bank committed $7.2 billion to
climate change mitigation and adaptation financing, representing 35
percent of total IDA commitments in Bangladesh across all sectors.
The World Bank supported Bangladesh to invest in early warning
systems, embankment, and cyclone shelters, along with afforestation
activities, which that has helped reduce cyclone-related fatalities
100-fold since independence. This has helped build greater
resilience for 6.3 million people living in vulnerable coastal
regions.


[4]

The UK will draw on experience of other Taskforce pilot countries
(for instance, Jamaica and Rwanda) where similar approaches are
being coordinated by the IMF and MDBs.


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Maria Candia Romano

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson




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