Political situation in Bangladesh remained the main challenge to smooth programme delivery, particularly in the last quarter of fiscal 2007, Asian Development Bank (ADB) said in its annual report. However, it said, close coordination with the Bangladesh government helped mitigate the constraints, the report said adding that policy dialogue with the government helped foster reforms in the energy, education, and railways sectors.

The dialogue also focused on improvements in transparency and efficiency in public procurement, portfolio performance, and preparation of operational risk mitigation action plans to address key governance risks. The Manila-based donor agency released on April 25 the report ahead of its 40th Annual Meeting to be held May 4-7 in Kyoto, Japan.

The ADB approved a total US$7.4 billion in loans to its member countries in 2006, reflecting a 28 per cent increase over the previous year’s level. For Bangladesh, ADB approved four projects totaling $255.1 million for rural infrastructure improvement, secondary education, secondary towns’ water supply and sanitation, and improvement of capital market and insurance governance. In addition, a multi-tranche financing facility worth $430 million for the Bangladesh railways sub-sector was approved.

The ADB also approved seven technical assistance grants totaling $5.7 million for Bangladesh. The rural infrastructure improvement project will upgrade about 9,920 km of tertiary roads that make up the rural road network to help reduce poverty in 23 districts in north and central Bangladesh, providing the poor with ready access to services.

According to the report, total grants approved by the ADB in 2006 amounted to US$538.4 million, earmarked for 43 projects. This amount is less than half the US$1.1 billion in grants approved in 2005, when more funds were needed to immediately address the destruction wrought by the December 2004 Asian tsunami and the earthquake that struck Pakistan in October 2005, it added. China received US$1.6 billion, or 21 per cent, of the total loans that the ADB extended last year, making it the biggest loan recipient, the report said.

The ADB approved three MFFs for Pakistan totaling US$2.2 billion; three others valued at US$1.1 billion for India; a US$430 million facility for Bangladesh; and a US$50 million facility for China. Of the total grants the ADB approved last year, US$274.9 million came from ADF IX, while US$235 million came from external sources, with full or partial administration by the ADB.

In 2006, the Bank arranged US$1.5 billion direct value-added co-financing for 103 projects, of which US$1.4 billion supported 29 investment projects and US$92.7 million helped finance 74 technical assistance projects.