India yet to soften terms, conditions of its line of credit
MoF delegation to visit New Delhi next week
FHM Humayan Kabir
The execution of projects, to be funded by the Indian line of credit, is proceeding at a snail's pace for, what the concerned Bangladesh officials stated, its harder terms and conditions.
"Although the Indian authority had made an assurance of relaxing the terms and conditions of its credit line early this year, no effective progress is yet visible in this respect," a senior Ministry of Finance (MoF) official said.
As a result, Bangladesh's state-owned agencies are unable to start the physical implementation of 20 schemes, even after nearly two years following the signing of $1.0 billion credit deal, he told the FE.
However, the Indian Finance Minister, Mr. Pranab Mukerjee, announced in Dhaka during his last visit to Bangladesh that the government of India had decided to convert $200 million, out of the original $1.0 billion credit line, into a grant, giving the full authority to the government of Bangladesh to spend the 'grant' part of the fund in any area or sector that it deemed fit and appropriated.
He also stated then that the rate of interest on the remaining part of the fund i.e. $800 million Indian credit, would also be lowered.
Earlier, a high-powered Indian delegation visited Dhaka in January this year. The Indian side assured then its Bangladesh counterpart that the former would allow procurement of goods, works and services from Bangladesh's local market up to 60 per cent, instead of the original stipulation at only 15 per cent, in cases where Indian businesses were not in a position to deliver the goods or render the services within a given time-frame.
It also pledged to relax other lending modalities on a project-to-project basis.
A MoF official said a government delegation will visit New Delhi in the middle of next week to sort out the hurdles to the implementation of related projects and to evaluate the status of 20 projects which were confirmed in August 2010, under the Indian credit line.
"We will sit with the Indian counterpart to discuss the barriers to implementation of projects," a senior MoF official said.
Early this year, the government decided to drop five on-going projects, which were included in the original list for implementation, at a cost of US$411 million, under the US$1.0 billion Indian credit package.
The projects, mostly in the railway sector, will be dropped because of 'harder terms and conditions' of the credit, the official said.
Meanwhile, the government of Bangladesh decided to include some new projects, dropping some five, out of the original ones. But such new projects are still to receive the approval from the Indian lender -- Exim Bank, the sources said.
"We have sent the list of the newly-included projects under the Indian credit line. But Exim Bank of India is yet to respond to our proposal," said an Economic Relations Division (ERD) official.
The original 20 projects under the Indian credit line were mostly purported to upgrading the infrastructural facilities in Bangladesh. But implementation of most such projects has become uncertain due to the existing lending terms and conditions, the sources said.
The government of India in August 2010 confirmed its line of credit to Bangladesh.
Under the original loan deal, Bangladesh was to procure at least 85 per cent of goods, works and services from India. Only 15 per cent goods, works or services could be procured under its terms and conditions from Bangladesh in the event of the failure of the India contractors to source it from within their country.
The ERD official said the Indian lender, Exim Bank, has so far included 13 projects, out of a total of 20, that were taken up by the government of Bangladesh for implementation, during the last one and a half years' period.
The Bangladesh Railway is the worst victim of the situation, with its 12 projects. The quoted prices of the Indian contractors in the related bids were far above the official estimates, the sources said.
The Roads and Highways Department is also another victim with its four projects under the Indian credit line as it has been found impossible to construct roads, by procuring 85 per cent of goods, services and works from India, the officials said.
"We are hopeful of resolving the emerging complexities of the Indian credit line in the next meeting in New Delhi, to be held on June 6-7," an ERD official said.
Furthermore, he stated that the pace of works relating to implementation of projects has got some momentum in recent days due to regular communications with the Indian lender, Exim Bank.
MoF delegation to visit New Delhi next week
FHM Humayan Kabir
The execution of projects, to be funded by the Indian line of credit, is proceeding at a snail's pace for, what the concerned Bangladesh officials stated, its harder terms and conditions.
"Although the Indian authority had made an assurance of relaxing the terms and conditions of its credit line early this year, no effective progress is yet visible in this respect," a senior Ministry of Finance (MoF) official said.
As a result, Bangladesh's state-owned agencies are unable to start the physical implementation of 20 schemes, even after nearly two years following the signing of $1.0 billion credit deal, he told the FE.
However, the Indian Finance Minister, Mr. Pranab Mukerjee, announced in Dhaka during his last visit to Bangladesh that the government of India had decided to convert $200 million, out of the original $1.0 billion credit line, into a grant, giving the full authority to the government of Bangladesh to spend the 'grant' part of the fund in any area or sector that it deemed fit and appropriated.
He also stated then that the rate of interest on the remaining part of the fund i.e. $800 million Indian credit, would also be lowered.
Earlier, a high-powered Indian delegation visited Dhaka in January this year. The Indian side assured then its Bangladesh counterpart that the former would allow procurement of goods, works and services from Bangladesh's local market up to 60 per cent, instead of the original stipulation at only 15 per cent, in cases where Indian businesses were not in a position to deliver the goods or render the services within a given time-frame.
It also pledged to relax other lending modalities on a project-to-project basis.
A MoF official said a government delegation will visit New Delhi in the middle of next week to sort out the hurdles to the implementation of related projects and to evaluate the status of 20 projects which were confirmed in August 2010, under the Indian credit line.
"We will sit with the Indian counterpart to discuss the barriers to implementation of projects," a senior MoF official said.
Early this year, the government decided to drop five on-going projects, which were included in the original list for implementation, at a cost of US$411 million, under the US$1.0 billion Indian credit package.
The projects, mostly in the railway sector, will be dropped because of 'harder terms and conditions' of the credit, the official said.
Meanwhile, the government of Bangladesh decided to include some new projects, dropping some five, out of the original ones. But such new projects are still to receive the approval from the Indian lender -- Exim Bank, the sources said.
"We have sent the list of the newly-included projects under the Indian credit line. But Exim Bank of India is yet to respond to our proposal," said an Economic Relations Division (ERD) official.
The original 20 projects under the Indian credit line were mostly purported to upgrading the infrastructural facilities in Bangladesh. But implementation of most such projects has become uncertain due to the existing lending terms and conditions, the sources said.
The government of India in August 2010 confirmed its line of credit to Bangladesh.
Under the original loan deal, Bangladesh was to procure at least 85 per cent of goods, works and services from India. Only 15 per cent goods, works or services could be procured under its terms and conditions from Bangladesh in the event of the failure of the India contractors to source it from within their country.
The ERD official said the Indian lender, Exim Bank, has so far included 13 projects, out of a total of 20, that were taken up by the government of Bangladesh for implementation, during the last one and a half years' period.
The Bangladesh Railway is the worst victim of the situation, with its 12 projects. The quoted prices of the Indian contractors in the related bids were far above the official estimates, the sources said.
The Roads and Highways Department is also another victim with its four projects under the Indian credit line as it has been found impossible to construct roads, by procuring 85 per cent of goods, services and works from India, the officials said.
"We are hopeful of resolving the emerging complexities of the Indian credit line in the next meeting in New Delhi, to be held on June 6-7," an ERD official said.
Furthermore, he stated that the pace of works relating to implementation of projects has got some momentum in recent days due to regular communications with the Indian lender, Exim Bank.
