Will repurposing unspent World Bank loans serve development needs?

Idle World Bank Loan Balances Put Focus on Bangladesh’s Development Priorities

Bdbusinessdaily.com – Bangladesh is holding more than Tk2,500 crore in World Bank loan money that has not been used for its intended development work, raising fresh questions about project readiness, implementation capacity and the possible redirection of funds toward urgent national needs.

The issue emerges as the government considers using unspent money from active foreign-funded projects to support energy and food security requirements during the current fiscal year. Such a move can offer short-term flexibility, but it also requires careful choices to ensure that delayed projects do not lose their original development value.

A World Bank document titled Bangladesh Outstanding Refunds Update October 2026, sent to the Economic Relations Division on 12 October, identified substantial balances in designated accounts across several sectors. The funds include amounts that have remained unused for extended periods, balances linked to expired disbursement deadlines, and money that could become refundable if required documentation is not submitted.

Large balances remain in inactive accounts

Taka-denominated designated accounts alone hold Tk1,910.63 crore in outstanding inactive balances. Individual account amounts vary widely, from less than Tk1 crore to more than Tk70 crore.

Seven accounts associated with projects whose implementation periods have already ended contain Tk114.6 crore that is classified as refundable. Another two accounts continue to hold Tk412.35 crore even though their disbursement windows have expired.

A further Tk1,100.91 crore is sitting in accounts connected to two large projects that are due to reach their disbursement deadlines within four months. If spending details and supporting records are not provided within the required timeframe, these amounts could be treated as overdue.

The document also identifies $3.75 million in unutilised money under Advance ID-2 of the Electricity Distribution Modernisation Project. Funds under the Learning Acceleration in Secondary Education project have similarly shown no activity for six months.

Other projects facing unresolved issues related to ineligible expenditure or procurement concerns include the Scaling-up Renewable Energy Project, the Sustainable Coastal and Marine Fisheries Project, the Emergency Multi-sectoral Rohingya Crisis Response Project, Supporting Rural Bridges, the Livestock and Dairy Development Project, and the Private Investment and Digital Entrepreneurship Project.

Planning and execution gaps slow disbursement

Foreign loans do not automatically translate into completed roads, power systems, education initiatives or other public services. Before money can be spent, projects need sound designs, available land, workable procurement plans, capable management teams and timely decisions from multiple agencies.

In Bangladesh, weak preparation at the start of projects has often created delays later. Inadequate feasibility work, unresolved land acquisition, legal and administrative disputes, lengthy tender assessments and slow contractor appointments can all hold up implementation.

Bureaucratic file movement and delayed decision-making add further pressure. Projects may also struggle when experienced full-time project directors are unavailable or when leadership changes repeatedly. These disruptions can weaken institutional memory and make it harder to maintain momentum from approval through implementation.

The consequences are significant. Loan resources can remain parked in accounts while the services and infrastructure they were meant to finance are delayed. At the same time, a country may continue to face urgent demands for energy supplies, food imports and agricultural inputs.

Repurposing offers flexibility, but carries trade-offs

The World Bank describes the reassignment of unused project funds as repurposing. Bangladesh used this option in fiscal year 2026, redirecting more than $1 billion from ongoing projects and from loans that had expired or were still undisbursed.

Of that total, $713 million was released for fuel purchases. Another $300 million went toward emergency imports of food and fertiliser. The scale of that shift shows how inactive development financing can become a source of support during periods of immediate economic pressure.

Yet repurposing is not a cost-free solution. Removing money from one project may help meet a pressing need elsewhere, but it can also leave the first project with reduced scope, further delays or weaker outcomes. The practical question is not simply whether idle funds can be moved, but which projects can spare them without undermining their public purpose.

Decisions should therefore weigh the expected social and economic impact of both sides of the transfer. Energy and food security can demand rapid action, especially when households and businesses are exposed to higher costs or supply uncertainty. However, projects involving renewable energy, education, rural connectivity, fisheries, livestock or digital investment may also have long-term importance for growth and resilience.

Faster approvals are part of the response

The government has set a target of reducing the approval period for foreign-funded development projects to five months. A high-level Bangladeshi delegation communicated that commitment during a meeting with World Bank Managing Director Anna Bjerde in Bangkok on 13 October.

Speed matters because delays can begin even before construction, procurement or service delivery starts. An Economic Relations Division assessment found that the average time from World Bank board approval to the first disbursement is 11.8 months. When nearly a year passes before initial funds are released, a meaningful share of the financing timetable may already have been lost.

Improving the process will require more than faster paperwork. Projects need credible feasibility studies, early settlement of land questions, realistic procurement schedules and stable leadership. Better monitoring of designated accounts could also help identify stalled spending before balances become refundable or overdue.

For Bangladesh, the immediate opportunity is to use available financing wisely where urgent needs are greatest. The longer-term challenge is more fundamental: ensuring that development loans are converted into visible, timely results rather than remaining unused until they must be returned, reallocated or written off from the original plan.