Bangladesh Unveils Innovative Climate Finance Strategy to Tackle $1 Billion Annual Losses

Bangladesh has kicked off a new phase of its climate finance strategy. This effort aims to address severe climate impacts that are costing the nation nearly $1 billion each year. The project, called Inclusive Budgeting and Financing for Climate Resilience (IBFCR) Phase II, was introduced at the Finance Division in Dhaka this Tuesday.

As global temperatures hit a record 1.55°C above pre-industrial levels in 2024, Bangladesh faces increasing climate threats. Despite contributing only 0.56% of global greenhouse gas emissions, it is one of the most vulnerable countries in the world. Each year, tropical cyclones alone account for 0.7% of the country’s GDP loss. Additionally, agricultural production in southern Bangladesh could decrease by 18% by 2040 due to climate change. The World Bank estimates that by 2050, 13.3 million people could be displaced within Bangladesh because of climate-related issues.

To address an annual financing gap of $12.5 billion—about 3% of the GDP—the Finance Division partnered with UNDP and received backing from the French Development Agency (AFD) to launch this initiative. Finance Division Secretary Md. Khairuzzaman Mozumder emphasized the importance of this program, stating, “Even though we contribute little to global emissions, we are facing the consequences. This program is a crucial step to help us build resilience and adapt to these changes.”

The program plans to enhance collaboration across various ministries and improve the implementation process. Bilquis Jahan Rimi, Additional Secretary of the Finance Division, noted that effective coordination is essential for integrating climate priorities into public financial management.

UNDP Resident Representative Stefan Liller highlighted that IBFCR Phase II focuses on embedding climate priorities in public finance. This means every taka spent will aim for tangible benefits for the people. Moreover, Cecilia Cortese from AFD mentioned that this program is part of a broader support system, including a €300 million policy-based loan scheme dedicated to helping the government fulfill its climate goals.

An insightful discussion on “Climate-Informed Public Finance Management in Bangladesh” included expert panels featuring key figures like Dr. Fahmida Khatun and Dr. Ziaul Abedin. They shared strategies for updating Bangladesh’s Climate Fiscal Framework and enhancing climate finance tracking.

IBFCR Phase II aims to build on previous lessons to ensure funding reaches those most affected by climate change, promoting tools like the Local Adaptation Plan of Action (LAPA) and Climate Vulnerability Index (CVI). Ultimately, the initiative hopes to improve transparency and accountability while aligning Bangladesh’s budget with the Paris Agreement and the Sustainable Development Goals.

This strategic move reflects the urgency of tackling climate change in Bangladesh, a nation that, despite its minor contribution to global emissions, feels the heavy weight of environmental challenges. The commitment to adapt and mitigate these challenges signifies an important step forward for the country’s future.



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Bangladesh,Climate Change,climate finance strategy