INFRASTRUCTURE PARADIGM: Pressure on forex reserves intensified
Staff Reporter :
Despite the significant transformation in the country’s communication infrastructure, the burden on foreign currency reserves has increased due to mega projects such as the Padma Bridge, Metro Rail, Rooppur Nuclear Power Plant, Elevated Express Way, and Karnaphuli Tunnel.
Economists said that the inauguration of one mega project after another has visibly transformed the communication network across the country, but the foreign reserves are still under continuous strains.
They said that development occurring in the country is prominently visible through mega projects such as the Padma Bridge, Metro Rail, and Elevated Expressway, which were crucial for the advancement of the country’s infrastructure.
However, the expenditure on these projects has been significantly high for various reasons. They suggest that if the costs were reduced, the returns on these projects could be much better.
Though the development by mega projects is visible, there is a noticeable decline in the country’s foreign currency reserves, they pointed out.
They further said that the pressure on the foreign reserve is not only due to domestic factors but also by global circumstances and there is hardly any possibility of reducing pressure on reserves before the election and after the election as the political landscape is still tumultuous.
The Padma Bridge stands as a monumental development in the country’s infrastructure, significantly impacting the communication network across 21 districts in the southern and southwestern regions.
This bridge, adorned with various architectural features, has become a source of pride for the nation.
The project was initiated in 2007, with an estimated cost of Tk 10,161.75 crore. After several adjustments and additional expenses, the latest modification increased the total expenditure to Tk 30,193 crore, as of June 22.
Though the World Bank canceled their loan in June 2012, the government in the same year decided to finance the construction independently and signed a deal with China Major Bridge Engineering Company Limited on June 17, 2014.
Prime Minister Sheikh Hasina inaugurated the construction project in Munshiganj on December 12, 2015, and later inaugurated it on June 25, 2022.
The government inaugurated the project to showcase development, but the strain on reserves has added an element of uncertainty, influenced by both domestic and global factors.
Another project that has brought about a fundamental transformation in the country’s communication infrastructure is the Metro Rail spanning in the heart of the capital.
According to the US National Bureau of Economic Research, Dhaka is considered the world’s slowest-paced city. Yet, in this sluggish city, Metro Rail has now made commuting possible in a very short time at several locations.
It takes just around half an hour to travel from Uttara to Motijheel using the Metro Rail. The prospect of metro rail operations in the capital, Dhaka, was unimaginable for many just a few years ago.
Another project aimed at improving the communication infrastructure in the slow-paced city of Dhaka is the Elevated Expressway, spanning 46.73 kilometers, with the length of ramps and connecting links totaling 27 kilometers. The total cost of this project is Tk 8,940 crore.
A section of this project for transportation was inaugurated last year. It now takes only 10 minutes to travel from the airport to Farmgate using the Elevated Expressway.
The first ever under water tunnel in South Asia, known as the ‘Bangabandhu Tunnel,’ was inaugurated in the coastal region of the Karnaphuli River in Chattogram last year.
The foundation for this tunnel was laid in October 2016, and construction work began in February 2019. Initially estimated at around Tk 8,000 crore, the total cost of the project escalated to Tk 10,689.71 crore. Bangladesh is investing Tk 4,619.70 crore, while China is providing a loan of Tk 6,070 crore.
Country’s railway communication gained another pace through the inauguration of Dohazari-Ghumdhum Rail Project connecting Dhaka and Cox’s Bazar via Chattogram started on December 1 last year. The project cost was Tk 18,347.47 crore though the initial estimation was Tk 1,852 crore.
Apart from communication infrastructure, the country’s power sector has also witnessed another paradigm shift through the construction of the Rooppur Neclear Power Plant by signing an agreement with Russia in November 2011. The total cost of this two-unit nuclear power plant is set at around $13.5 billion.
The goal is to complete the project by December 2025, and it is expected to generate 2,400 megawatts of electricity from the two units of the plant.
Despite infrastructural development, the country’s foreign currency reserves are facing increasing pressure due to one mega project follows another. As of August 24, 2021, the foreign currency reserve stood at $48.4 billion, the highest ever for the country.
However, concerns have arisen regarding the pressure on these reserves due to the continuous implementation of large-scale development projects.
Eminent economist A.B. Mirza Azizul Islam said, “Mega projects undertaken are essential for the country’s infrastructure development. These projects will yield positive results. But there are internal and global factors contributing to the strain on foreign currency reserves.”
He pointed out that right now there was nothing to do before the general election, but steps should be taken to carefully manage the reserves from further reduction.
