Bangladesh seeks US$2 billion loan from WB to fund ambitious climate change plan
Low-lying Bangladesh – home to 160 million people and the world’s largest river delta system – is particularly vulnerable to climate change as rainfall patterns are disrupted and sea levels rise. Floods in July and August, for example, affected at least 5 million people and put as much as a third of the delta region underwater, according to the country’s Flood Forecasting and Warning Centre.
Now, the country expects the World Bank to approve US$2 billion in loans to fund its ambitious climate adaptation plan, with the first instalment coming early next year.
“Talks have reached the final stage as Bangladesh is seeking funds from international donors. The World Bank is just one,” Shamsul Alam, senior secretary of Bangladesh Planning Commission, said in an interview. The Japanese International Cooperation Agency has also been approached.
The World Bank funds will go toward Delta Plan 2100, which aims to minimise the damage the country’s rivers and estuaries can cause during flooding events.
“Continued river erosion displaces about tens of thousands of people every year,” said Mercy Tembon, World Bank country director for Bangladesh.
The country’s proposal combines water and land management with economic development projects, which will “reduce poverty and open up economic opportunities”, Tembon added.
The first phase of the plan involves 80 projects such as land reclamation, construction of embankments, and creation of safe navigation channels, and will require about US$38 billion in investments by 2030.
Even taking the mildest global warming estimates, where temperature rise stays below 1.5 degrees Celsius compared to pre-industrial levels, as many as 600,000 Bangladeshis will permanently lose their homes. In the worst-case scenario, that number could rise to as many as 3 million, according to the non-profit science advocacy group Climate Central. Even that high number doesn’t include the millions of others who’d be periodically displaced.
Recognising the immense challenge it faces, the Bangladesh government approved the Delta Plan in 2018. The country currently invests 0.8 per cent of its gross domestic product in water-related projects, which will have to rise to about 2.5 per cent by 2030 to meet the plan’s demands, Alam said.
Even if the World Bank money comes through, raising the remainder won’t be easy. The country borrowed US$2.7 billion this year to tackle the pandemic. Then in May, the country was hit by Cyclone Amphan, which forced the evacuation of 2.4 million people. The floods in July followed.
Every crisis requires the country to spend money for recovery and thus increase its borrowing. The International Monetary fund issued a report in June projecting that disaster-related borrowing will raise Bangladesh’s public debt-to-GDP ratio to about 41 per cent of GDP over the coming years, from 36 per cent at the end of 2019.
“Climate change is a priority for Bangladesh’s development objectives, as it is one of the countries most vulnerable to extreme weather events,” the IMF report said. “As efforts to promote a green recovery take hold, Bangladesh is also well placed to attract foreign investment that will contribute to climate-change mitigation.”