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19 July 2021

The concept of the blue bond as a development financing tool is fairly new in Bangladesh and still remains largely unexplored. Bangladesh is facing a financing gap in reaching the SDGs by 2030. The private sector would be a key player in addressing this gap.

United Nations Development Programme (UNDP)’s Strengthening Institutional Capacity for SDGs Achievement in Bangladesh (SC4SDG) project with support from UNDP-UNEP Poverty-Environment Action (PEA) for Sustainable Development Goals and Bangladesh Planning Commission’s General Economic Division recently conducted a study on “Assessing the Feasibility of Instituting Blue Bond in the Bond Market of Bangladesh”.

The study has considered three scenarios for the Bangladesh Blue Economy (BBE) through 2035. They are: BBE will grow at (i) 5 per cent, (ii) 8 per cent, and (iii) 10 per cent rates. Under these three scenarios, the size of BBE could reach between US$12.9 billion to US$25.9 billion in 2035.

The study has also tried to estimate the required investment for the three scenarios since one of the key preconditions of 5 to 10 per cent growth rates of BBE is appropriate investment. The results show that Bangladesh will need to invest between US$2.45 billion to US$7.22 billion annually during the years 2021-2035.

The SCS4DG project is working to establish a collaborative platform between the Government and the private sector to enable an ecosystem for SDG-focused private investment. In this context, Bangladesh has recently introduced sustainable bonds such as the Sukuk bond and green bond in the financial market.

Realizing the efficacy of the blue bond for promoting the ocean economy is considered a niche for the country as it holds huge economic potential. The study has created renewed enthusiasm for the ocean economy among policymakers and captured the attention of private sector players as well.

This marks the first time that the country endeavored to critically analyze the possibility of promoting blue bonds in Bangladesh as a sustainable financing instrument for promoting blue economy projects. A national dialogue was organized to disseminate information and sensitize stakeholders about blue economy and sustainable bonds. Through this innovative intervention of the SC4SDG project, the Government of Bangladesh has decided to take up recommendations of the study and present them to the Cabinet of Bangladesh.

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The series Stories of Change 2021 was prepared by UNDP–UNEP Poverty-Environment Action for Sustainable Development Goals through the generous financial support of the Governments of Austria, Belgium, Norway, Sweden and the European Union.