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SATURDAY, OCTOBER 24, 2026
Will repurposing unspent World Bank loans serve development needs?
Analysis（https://www.tbsnews.net/analysis）
Saifuddin Saif（https://www.tbsnews.net/author/saifuddin-saif）
24 October, 2026, 01:00 pm
Last modified: 24 October, 2026, 02:20 pm
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Will repurposing unspent World Bank loans serve development needs?
Repurposing risks undermining original objectives of loans, experts say
Saifuddin Saif（https://www.tbsnews.net/author/saifuddin-saif）
24 October, 2026, 01:00 pm
Last modified: 24 October, 2026, 02:20 pm
Photo: Collage
Several development projects in Bangladesh financed by the World Bank have large amounts of foreign loan funds lying unused, unadjusted or idle because of various complications in project planning and implementation. According to the lender's latest report, more than Tk2,500 crore in such funds remains idle in designated accounts across different sectors.
The findings are contained in a report, "Bangladesh Outstanding Refunds Update October 2026", sent by the World Bank to the Economic Relations Division (ERD) on 12 October.
Weak project preparation, land acquisition, procurement complications, bureaucratic delays, shortages of project directors, and limited implementation capacity often prevent development projects from utilising foreign loans on time, according to ERD officials.
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However, as in the previous fiscal year, the government can use idle funds from ongoing projects in the current fiscal year to meet urgent energy and food security needs, they said.
But economists said while this opportunity to redirect unused funds, known as "repurposing" by the World Bank, is viewed positively, it should not be treated merely as an alternative source of emergency financing.
They said authorities must consider which projects the funds are being withdrawn from, where the money is being spent and how significant the impact will be on society and the economy. Otherwise, there is a risk of undermining the original objectives of loans.
In FY26, more than $1 billion in idle funds from ongoing projects and expired or undisbursed loans was redirected to meet urgent needs. Of this, $713 million was disbursed to finance fuel purchases, while $300 million for emergency food and fertiliser imports.
Billions tied up in inactive accounts
According to the World Bank's report, substantial funds remain tied up in designated accounts whose disbursement deadlines have expired, are due to expire within four months, or have recorded no spending for at least six months. Taka-denominated accounts alone contain Tk1,910.63 crore in outstanding and inactive balances.
Balances in inactive accounts range from less than Tk1 crore to Tk70 crore or more.
Funds awaiting resolution over ineligible expenditure or misprocurement relate to several projects, including the Scaling-up Renewable Energy Project, Sustainable Coastal and Marine Fisheries Project, Emergency Multi-sectoral Rohingya Crisis Response Project, Supporting Rural Bridges, Livestock and Dairy Development Project, and Private Investment and Digital Entrepreneurship Project.
The report also flags $3.75 million in unused funds under Advance ID-2 of the Electricity Distribution Modernisation Project. Funds under the Learning Acceleration in Secondary Education project have likewise remained inactive for six months.
Seven designated accounts linked to projects whose implementation periods have ended contain Tk114.6 crore in outstanding balances classified as refundable. Two other accounts hold Tk412.35 crore in account balances despite the expiry of their disbursement deadlines.
A further Tk1,100.91 crore remains unused in accounts linked to two major projects whose disbursement deadlines expire within four months. Unless the required expenditure details are submitted on time, these balances risk being classified as overdue.
Why loans remain unspent
ERD officials said weaknesses in project planning and implementation are preventing projects from using foreign loans on time. Funds remain idle even after deadlines expire, while intended development outcomes go unrealised.
Poor feasibility studies and land acquisition complications are major obstacles. Administrative and legal disputes over land, complex procurement procedures, delays in contractor selection, and lengthy tender evaluations all slow implementation. Prolonged file processing and slow decision-making further impede progress.
A shortage of experienced, full-time project directors and frequent changes in leadership also disrupt continuity and weaken implementation capacity.
The government aims to cut the approval period for foreign-funded development projects to five months to speed up implementation, ERD sources said.