Bangladesh signs USD 4.5 bn loan deal with India
DHAKA : Minister for Finance and Corporate Affairs of India Arun Jaitley on a three day visit to Dhaka had bilateral talks with his counterpart Abul Maal Abdul Muhith. The two Ministers discussed the economic relationship between the two countries focused on enhancing trade and investment as India provided a line of Credit to Bangladesh.
An Agreement was inked to implement the 3rd Line of Credit of 4.5 billion US dollar, which was announced during Bangladesh’s Prime Minister Sheikh Hasina recent visit to New Delhi in April this year. Another agreement was also inked related to ‘Joint Interpretative Notes’ for the Protection and Promotion of Investments.
Early in the day, he visited Dhakeshwari National Temple in the city. Mr. Jaitley is scheduled to deliver a talk on ‘Macroeconomic Initiatives of Indian Government ‘ and launch a scheme of cashless transactions of visa services run by the State Bank of India on behalf of the Indian Mission. He is also scheduled to inaugurate the Dhaka Representative Office of the Exim Bank of India and have a meeting with Prime Minister Sheikh Hasina this evening.
The new Indian line of credit, worth a staggering USD 4.5 billion, will be used to fund 17 major projects in Bangladesh, which include electricity, railroads, roads, shipping and ports. As with previous LoC agreements, Bangladesh will pay an interest rate of 1 per cent a year. It will have 20 years to pay back the loans, with a grace period of five years.
Under the agreement, Bangladesh would have to purchase 65 to 75 per cent of the services, goods or works from the Indian market with the money to be provided under the third LoC following the precedence of the previous two nearly identical agreements.
Bangladesh has two other LoCs open with India: the first one was signed in 2010, and the second one in 2016. These LoCs are collectively worth Tk3.06 billion, but till last year, Bangladesh government has been able to use only USD 576 million. Some projects under the first LoC of USD 862 million faced delay in implementation while the physical works of the 14 projects under the second LoC of USD 2 billion were yet to start.
“Bangladesh has developed significantly on the socioeconomic front in the past seven years,” Mr. Jaitley said following the signing of the deal. “We have stood by Bangladesh’s attempts to develop and we will do so in the future. This significant agreement is a continuation of that effort,” he said.
Speaking on the occasion, Mr. Muhith said, “Bangladesh and India have excellent relations at the moment.” “They stood by us during our independence. We hope they will continue to do so in the future.”
( With Agency Inputs ).
