Bangladesh-India again to accelerate disbursement of loans
Staff Reporter :
Bangladesh and India have agreed again to accelerate disbursement of loans for implementing the projects under the Indian Lines of credit (LOCs) as only 20 per cent of the loans have been disbursed in last 13 year.
Several implementing firms are showing their unwillingness to run the projects due to delay in disbursement of the LOC loans.
Bangladesh also sent proposal letters to India for withdrawing some projects from LOC list and with the consent of the Indian authorities, the two projects were removed from the LoC list in May this year, according to the External Relations Division (ERD).
The ERD officials said 14 out of 40 LOC enlisted projects have already been implemented, 8 projects are waiting for approval and the rests are implementing.
Following this, the representatives of the two countries have agreed again to bring pace in disbursing loans in the 21th review meeting held in Dhaka last week.
Md Anwar Hossain, Additional Secretary of ERD and Ajoy Kumar, Joint Secretary of the Indian Foreign Ministry led the representatives of the two countries.
India has so far offered $7.862 billion to Bangladesh to develop critical infrastructure under the four LoCs. Under the 4th LoC, some $500 million has been allocated for defense procurement.
The latest figure shows that out of the $7.362 billion under the first three LoCs, only $ 1.489 billion or 20 per cent of the total loans has been disbursed till June this year, according to the External Relation Division (ERD).
The first LoC, signed in 2010, amounted to $862 million, of which $607 million was disbursed. The disbursement rate is 70.42 per cent.
But the second LoC amounting to $2.0 billion has a disbursement rate of only 41.15 per cent as under it a paltry $87 million has been released. It was signed in 2016.
The highest amount was earmarked under the third LoC, signed in 2017, but the disbursement has so far been only $5.14 million.
Under the circumstances, ERD officials argued that project selection and modification of some rules are crucial to the effective use of the LoCs.
According to a report of the ERD, “The standard condition of the LOCs is that 75 per cent of procurement shall be made from India.
However, the government of India has agreed to relax the conditions for larger procurement within Bangladesh on a case to case basis, which causes complications and delay.”
It suggested that before approaching India for special dispensation, the External Relation Division (ERD) should examine the standard rules followed in case of bilateral tied loans from other sources before asking for modification of standard rules.
Officials noted that Indian LoC component of a big project may be excluded if it is found that the disbursement of funds will take a long time.
In this case, they cited the example of the Rooppur nuclear power plant project, where a component related to power evacuation, is being implemented under the LoC.
“If timely completion and synchronisation of components can be better served by eliminating the LoC portion, the entire package may be financed by the government subject to satisfactory safety arrangement suggested above,” said the report.
