The World Bank has made it official: It will no longer finance the construction of Bangladesh’s Padma River bridge.
The bank announced its decision in a June 29 statement, where it explained it had “credible evidence corroborated by a variety of sources” that some Bangladeshi government officials, executives of Canada-based implementer SNC Lavalin and private individuals were involved in a “high-level corruption conspiracy” in connection with the project.
The cancellation of the $1.2 billion loan is effective immediately. The decision follows several extensions of the loan’s activation deadline to give way to investigations related to the corruption allegation. The World Bank said it finally decided to forfeit the loan due to the Bangladeshi government’s “inadequate response” to the issue.
With the World Bank out of the project, support promised by the Asian Development Bank and the Japan International Cooperation Agency is also now in doubt. ADB did not immediately say whether it would cancel the $615 million it pledged for the project, but a person with knowledge of the issue has said the bank will likely do so considering the terms of its co-financing agreement with the World Bank, Reuters reports.
JICA, for its part, said it will announce a decision after discussing the issue with the Japanese government.
The World Bank’s withdrawal and uncertainty of other major funders is a major blow to the $2.9 billion bridge project, which is a priority undertaking of the Bangladeshi government. The bridge is expected to boost development of the country’s southwest by connecting it to the eastern and central regions.
Bangladeshi Finance Minister Abul Maal Abdul Muhith has dismissed the World Bank’s decision as “unacceptable” and its allegations “baseless,” according to news reports. He did say the government has started talks with the bank and is hopeful the lender will revise its stance.
Other funding options do remain open to Bangladesh should the World Bank stand by its position. The Padma River bridge project is also supported by the Islamic Development Bank and countries like Malaysia have already expressed interest in investing in it.
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About the author
Ivy Mungcal
As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.
