ADB To Cancel Or Redirect $408M Amid Project Delays

ADB To Cancel Or Redirect $408 Million From Bangladesh Projects Due To Delays

The Asian Development Bank (ADB) will cancel or redirect about $408 million from projects in Bangladesh this year due to prolonged implementation delays, even as some ADB-funded initiatives showed progress.

The Manila-based lender announced the decision during a project implementation review meeting in Dhaka on Tuesday, attended by ADB officials, the Economic Relations Division (ERD), and other ministries. These reviews are held twice a year to accelerate project execution.

"Some projects have faced significant delays in implementation," the ADB noted, adding that partial cancellation of underperforming loans could free up space for new lending aligned with government priorities.

Breakdown of the $408 million:

• $135 million already canceled earlier this year due to unused balances from procurement savings and favorable currency fluctuations.

• $166 million set for cancellation by December.

• $107 million to be repurposed for other programs.

Bangladesh has struggled with weak public investment, with FY2024-25 development expenditure at just 68% of the revised annual development program — the lowest in nearly 50 years. In the first two months of FY2026, implementation reached only 2.39%, the lowest in 16 years. Earlier this year, the World Bank also repurposed $670 million from 11 ongoing projects for similar reasons.

A senior ERD official said the funds from canceled or repurposed projects could be redirected to priority projects, reducing the country’s project commitment costs. The ADB emphasized that such measures would improve portfolio performance and the effective use of public funds.

The lender highlighted project readiness as a key factor behind delays, urging ministries to meet preconditions such as land acquisition, resettlement plans, and finalized tender documents before seeking loans.

The ADB also acknowledged challenges in 2025, including the national election and related code of conduct, which may disrupt project activities. Conservative targets have been set for contract awards and disbursements, with $150 million in contracts and $661 million in disbursements still required this year.

Withdrawal applications and supporting documents must be submitted by December 10, 2025. Only November and early December remain for civil works, procurement, and consultancy claims.

As of August 2025, Bangladesh’s ADB-financed portfolio totaled $11.81 billion across 50 projects in seven sectors, alongside 37 ongoing technical assistance projects worth $61.2 million.

Procurement has gradually improved, with low-value packages ($1–10 million) processed in an average of 165 days in 2025, down from over 235 days between 2020 and 2023. However, the energy sector continues to face delays due to poor project design, preparation, and prolonged government approvals.

The ADB recommended better procurement planning, realistic timelines, qualified consultants, expanded training, and improvements to the government’s e-GP system.

Financial management was rated "satisfactory," with 91% of projects on track, though a backlog of 1,028 unresolved audit observations remains a concern. The ADB urged Bangladesh to strengthen financial management and audit capacity alongside procurement reforms to ensure faster, more transparent, and efficient project implementation.