Climate Policy-Based Loan Program Signed Between France and Bangladesh

Dhaka - May 20, 2024 - Agence Française de Développement (AFD) is proud to announce the signature of a three-year Climate Policy-Based Loan Program and a first €100M credit approved for fiscal year 2023/24. This initiative aims to bolster the efforts of the Government of Bangladesh in fighting against climate change and to support the path of resilient and low-carbon development pathways in line with the priorities set out in the National Adaptation Plan, the Mujib Climate Prosperity Plan and the National Determined Contribution (NDC).

The alarming projections of extreme climate events damages underscore the urgency for robust climate action. Bangladesh has formulated comprehensive medium and long-term strategies with the National Adaptation Plan, the Mujib Climate Prosperity Plan and the National Determined Contribution (NDC).

However, their successful implementation necessitates substantial additional financing beyond current expenditures.

The Ambassador of France to Bangladesh, Her Excellency Marie Masdupuy stated: "With its high population density, rising sea level, and exposure to extreme weather events, Bangladesh stands as one of the most vulnerable countries globally. It is imperative that we support Bangladesh in its endeavors to adapt and mitigate climate risks and foster sustainable development. In September 2023, during the historical visit of President Macron in Bangladesh, he announced the preparation of a one billion Euros pact, to be endorsed by France and Bangladesh, to finance adaptation to climate change over the next five years. The Climate Policy-Based Loan Program represents an important milestone of the Adaptation pact. It sets the stage for launching reforms in key sectors to promote resilience and low-carbon development, thereby safeguarding the future of Bangladesh."

The Program is aligned and complementary to IMF, WB and ADB commitments and will provide essential financial support to expedite the realization of GoB's plans and associated reforms.

The Program aims in particular at :

1. Strengthening inclusive climate-related public planning, budgeting, and monitoring at the national and local levels.
2. Fostering climate and environmental resilience and prosperity through key sectors such as water and energy.

The financing from AFD will be by way of Sovereign concessional loans and should be of €100 million per year over 3 years.

The project also includes a medium-term technical cooperation agenda, financed through grants, with Bangladeshi partners, to facilitate a high-level public policy dialogue, ensuring collective action towards climate resilience and prosperity.