In a significant legislative milestone, the Bangladesh Parliament passed the New Development Bank Bill, 2023, signaling the nation’s formal eligibility to access funding from the lending arm of BRICS. Bangladesh formally entered into membership with the bank on September 16, 2021, through the signing of the ‘Instrument of Accession.’ However, in line with Article 48 of the NDB’s Articles of Agreement (AoA), the Agreement on the New Development Bank must undergo a ratification process. Similar to standard practices within other multinational financial institutions, this ratification entails the formulation of new legal frameworks to confer status, immunities, privileges, and tax/VAT exemptions. These measures are crucial in enabling the NDB to effectively pursue its goals and activities. This strategic move not only aligns Bangladesh with the New Development Bank (NDB) but also paves the way for a deeper connection with BRICS nations. By embracing several development programs and assistance, Bangladesh is positioning itself to overcome the economic challenges it has faced in recent times while embarking on a journey to establish new partnerships across various sectors and regions worldwide.
In 2015, the New Development Bank (NDB), also known as “the Bank,” was founded by the BRICS nations—Brazil, Russia, India, China, and South Africa. The primary purpose of this institution is to mobilize financial resources directed towards infrastructure and sustainable development projects within the BRICS countries and other emerging market economies and developing nations. The NDB’s central operations are based in Shanghai, with additional regional offices situated in each of the five BRICS countries.
As a collective, these emerging market and developing countries accommodate a substantial portion of the world’s population, with the BRICS nations alone representing over 40% of the global populace. The pace and quality of progress achieved by these nations will significantly impact the world’s ability to achieve its goals for sustainable development. The NDB specializes in various areas, including banking, development finance, sustainable infrastructure, climate finance, digital infrastructure, clean energy, transportation, climate change, and green development. In 2014, the BRICS alliance, comprising Brazil, Russia, India, China, and South Africa, initiated the establishment of the New Development Bank (NDB) through the signing of the Agreement on the New Development Bank. The NDB holds an authorized capital of USD 100 billion, which is accessible for subscription by members of the United Nations.
Unlocking Bangladesh’s Economic Potential through NDB Ratification
Bangladesh recently achieved a significant milestone by ratifying the New Development Bank (NDB) Bill, 2023 in its parliament, solidifying its access to BRICS funding. This move carries profound implications for the nation’s development landscape and international partnerships, structured as follows:
Path to Economic Resilience and Growth
By enacting the NDB Bill, Bangladesh has positioned itself among the rising economic giants globally. This opens avenues for vital financial support in key infrastructure and sustainable development initiatives, steering the nation towards enduring economic growth. The NDB provides loans with variable interest rates, spanning from SOFR+1.30% to SOFR+1.65%, accompanied by a 0.25% front-end fee and a 0.65% commitment fee.
Realizing Infrastructure Ambitions
In pursuit of ambitious infrastructure goals, Bangladesh finds a fitting partner in the NDB, given its substantial authorized capital and extensive project funding experience. The approval provides avenues for resources crucial to addressing the nation’s infrastructure gaps. Prioritizing financing for three Bridges Division projects—Payra, Bishkhali, and Karkhana bridges—underscores this commitment. Additionally, the finalization of a $235 million loan for a water supply project by Dhaka Water Supply and Sewerage Authority (Wasa) is anticipated.
Financing for Sustainable Development
The NDB is dedicated to aiding developing nations in attaining sustainable development goals, and Bangladesh’s participation underscores its commitment to environmentally conscious growth. Notably, the NDB has allocated funds for a Dhaka city water supply project, contributing $83 million, a Rajshahi water supply initiative with $115 million, a 120MW solar power plant in Raipura with $112 million, and a power distribution project in NESCO area. Discussions will additionally delve into a $203 million loan aimed at enhancing the distribution system in the west zone. This strategic financing aligns with Bangladesh’s pursuit of sustainable and eco-friendly development.
Bridging the Economic Challenges Gap
Navigating a fluid economic terrain, Bangladesh confronts evolving challenges. The backing from the NDB emerges as a stabilizing influence, assisting the nation in surmounting economic obstacles and fostering resilient advancement amid uncertainties. NDB loans, accessible in both US dollars and Chinese yuan, come without attached conditions. In contrast to World Bank loan projects, where spending may be obligated to consulting, Bangladesh retains the flexibility to implement projects under NDB loans, adhering to its own procurement rules.
Expanding Regional and Global Partnerships
By becoming an NDB member, Bangladesh broadens its sphere of influence. Collaborating with BRICS nations and other NDB members, the country gains access to diverse sectors and regions, fostering international cooperation and mutually beneficial partnerships.
Bangladesh’s NDB ratification is a pivotal step in diversifying external multilateral assistance, fostering economic growth, and positioning the nation as an influential player in the international development landscape. This strategic move is set to enhance Bangladesh’s economic resilience and prosperity in the years to come.
Bangladesh’s Strategic Posture: Diversifying Multilateral Assistance through the New Development Bank
In recent years, Bangladesh has made a strategic pivot in its approach to multilateral assistance. While historically reliant on Western institutions like the World Bank, IMF, and the EU, the country is now exploring diverse avenues for economic development and stability. At the forefront of this shift is Bangladesh’s association with the New Development Bank (NDB), a pivotal move with far-reaching consequences.
Embracing Diverse Development Collaborations
For years, Bangladesh’s reliance on Western institutions has led to a certain uniformity in its development strategies. However, with the emergence of the New Development Bank (NDB) supported by BRICS nations (Brazil, Russia, India, China, and South Africa), there’s a noticeable shift away from conventional Western-led approaches. This transformation underlines Bangladesh’s eagerness to engage with non-Western partners, ushering in fresh perspectives on development and collaboration. Furthermore, this approach resonates with Bangladesh’s foreign policy, which prioritizes cooperative efforts with various stakeholders, as long as they contribute to overcoming economic challenges and fostering emancipation.
Cultivating Economic Resilience through Collaborative Multilateral Efforts
Bangladesh confronts a dynamic economic terrain brimming with challenges. Its alliance with the NDB fortifies its economic resilience. The NDB’s financial backing for infrastructure and sustainable development projects provides a vital safety net, rendering Bangladesh’s economy sturdier and more adaptive. This fortification is especially critical as Bangladesh aims for a significant transformation in 2026, positioning itself as a developing nation. Thus, aligning and engaging with global development players becomes imperative.
Varied Funding to Fuel Infrastructure Aspirations
Bangladesh harbors ambitious plans for infrastructural expansion. Leveraging the substantial authorized capital of the NDB equips the nation with a substantial resource pool to turn these aspirations into reality. This diversified approach to funding expedites the development of crucial infrastructure, ameliorating historical deficiencies. Furthermore, as Bangladesh journeys down this path, it creates an open avenue for future cooperative endeavors, welcoming support from influential global players when needed.
Harmonizing with Global Sustainability Objectives
The NDB places pronounced emphasis on sustainable development, echoing the principles outlined in international frameworks like the Sustainable Development Goals (SDGs). Partnering with the NDB, Bangladesh reinforces its unwavering commitment to sustainability, aligning its economic ambitions with the worldwide call for responsible and eco-conscious growth. Bangladesh, through collaboration with both Western and non-Western development actors, establishes a solid foundation for advancing the SDG agenda in the forthcoming years. This collective endeavor serves as a testament to Bangladesh’s dedication to fostering a more sustainable future, encompassing economic growth that transcends borders.
In diversifying its multilateral assistance sources through the NDB, Bangladesh embarks on a transformative journey. This strategic shift has the potential to redefine the nation’s development landscape, opening doors to new partnerships and fresh perspectives. As Bangladesh positions itself at the intersection of Eastern and Western development paradigms, it promises to emerge as a dynamic and resilient player on the global stage. This shift not only boosts Bangladesh’s economic prosperity but also signals a strategic evolution in its approach to development, fostering a more sustainable and inclusive future.
To summarize, Bangladesh’s ratification of the New Development Bank (NDB) Bill, 2023 represents a pivotal moment in the nation’s pursuit of diversified external multilateral assistance. This strategic move aligns Bangladesh with a dynamic group of emerging economic powerhouses within the NDB, opening doors to financial support for vital infrastructure and sustainable development projects. As Bangladesh forges ahead with its ambitious infrastructural growth plans, the NDB’s substantial authorized capital serves as a valuable resource pool, addressing historical deficiencies and accelerating progress.
This strategic pivot towards diversified multilateral assistance not only enhances Bangladesh’s economic resilience but also positions the nation as an influential player in the international development landscape. As the nation faces evolving economic challenges, the NDB provides a vital safety net for overcoming uncertainties and maintaining progress. Bangladesh’s ability to strengthen its economy and foster partnerships across various sectors and regions sets the stage for a more prosperous and resilient future. This transformative shift has the potential to redefine the nation’s development landscape and promises a more sustainable, inclusive, and dynamic role on the global stage. Bangladesh’s journey with the NDB holds the key to a brighter future.
– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).