Dhaka keen to attract more Indian, Chinese funds

DHAKA - Bangladesh has decided not to bargain with foreign lenders for lowering loan interest rates in a bid to attract funds from India, China, South Korea and others for funding development projects, officials said here.

Dhaka expects investments from India, which has also pledged $1 billion of credit when Prime Minister Sheikh Hasina was in New Delhi in January.

Hasina is to visit China on Wednesday hoping to strengthen ties with Beijing that is a major economic partner and supplier of defence hardware.

The economic relations division (ERD) and all ministries and divisions have been asked not to insist on reducing interest rates even if it is not below two percent charged by lenders, so that loan negotiations could be concluded quickly, New Age newspaper said Saturday.

The planning ministry sent the directive in a letter to the ministries last week.

The decision to agree on interest rate at around two percent for loans during bilateral negotiations on foreign-funded projects was taken at a meeting Jan 21 of the National Economic Council, the government’s highest policy making body, with Hasina in the chair.

ERD officials said the decision was aimed at receiving loans from newly emerging sources of bilateral lending such as India, China and South Korea - countries which have developed strong industrial base to supply various equipments to another country.

It, however, asked the ministries and divisions to try to ensure that the terms and conditions of the loan agreements were ultimately in favour of the government of Bangladesh.

“We are currently negotiating with China, India and South Korea bilaterally for funding several projects at low interest rate,” ERD secretary M Musharraf Hossain Bhuiyan said.

Dhaka has failed to realise $8.66 billion in foreign aid between 1972 and 2009 for various reasons including slow negotiations, according to the ERD.

The present government hopes to mobilise $ 2.25 billion foreign aid in the next fiscal to implement key development projects on conclusion of loan negotiations with development partners as soon as possible, sources in the ERD said.

The country received foreign aid amounting to $1.23 billion in the first eight months of the current fiscal.