Bangladesh signs $4.5 bn LoC pact with India for infra development
The Dollar Business Bureau
Bangladesh on Wednesday signed an agreement for the third line of credit (LoC) with India for around $4.5 billion for its social and infrastructure sector development.
The pact was inked by David Rasquinha, Managing Director, Export-Import Bank of India (Exim) on behalf of India while Kazi Shofiqul Azam, Economic Relations Division Secretary signed for Bangladesh, in the presence of Arun Jaitley, Finance Minister of India and his Bangladeshi counterpart A M Abdul Muhith in Dhaka.
The new LoC will be used by Bangladesh for funding 17 key projects in the country in several sectors including roads, ports, shipping railroads and electricity.
Like earlier LoC pacts, the new loan is at an interest rate of 1%, to be paid back in 20 years, with a 5-year grace period.
“Bangladesh has developed significantly on the socio-economic front in the past 7 years. 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,” Jaitley said after the signing of the agreement.
The $4.5 billion agreement was announced during the visit of Bangladesh’s Prime Minister Sheikh Hasina to India in April this year.
As per the deal, Bangladesh would have to buy 65-75% of the goods, services or works from India’s market with the loan amount to be given under the new LoC.
Earlier, Bangladesh has signed two LoCs with India, which are collectively worth around 3.06 billion Bangladeshi taka. However, till 2016, the Bangladeshi government has utilised just $576 million.
Some of the projects under the first LoC (signed in 2010) of $862 million are facing delay at the implementation stage whereas the physical work on 14 projects under the second LoC (signed in 2016) of $2 billion are not yet started.