Indian debt trap in Bangladesh

[idune]

BNP urges no loan deal with India

Fri, Aug 6th, 2010 8:02 pm BdST

Dhaka, Aug 6 (bdnews24.com)—Main opposition BNP has called on the government not to sign the $1 billion credit line agreement with India.

"The disgraceful treaty that goes against our national interest is not acceptable to us," BNP standing committee member M K Anwar said at a news conference on Friday.

The agreement is scheduled to be signed with the Export-Import Bank of India on Saturday in presence of India's finance minister Pranab Mukherjee. New Delhi will route the credit line, the one-time single largest aid package for any other country, through the state-owned Exim Bank.

Anwar also called on the government to discuss the agreement in the parliament, make it public and organise an open national debate over it.

"The government will implement 17 projects in the interest of India with the loan. Of them, one is building roads, railways and land ports for India to facilitate their use of Bangladesh as a corridor," he said.

"India will have Bangladesh government built the infrastructures with the money, which our people will pay as tax," he continued.

Indian prime minister Manmohan Singh announced the loan package in January during prime minister Sheikh Hasina's official visit to New Delhi.

Anwar also claimed that Export Import Bank of India is a private bank and so it is disgraceful for Bangladesh to sign an agreement with the bank. Exim Bank, India's primier export finance institution is in fact owned by the government and it extends lines of credit to foreign governments and institutions.

Replying to a query, he threatened to launch movement if the deal is inked. "We are formally protesting against the agreement and will launch movement if the agreement is signed."

"The interest of the loan is too high and is attached with hard conditions and the repayment time is also rather short," he said.

"The government is taking the loan from India with interests seven times more than that the World Bank and the Asian Development Bank charge," he added.

"The government is taking the loan on 1.75 percent interest rate from the Exim Bank. In addition, it will have to pay 0.5 percent commitment fees to the bank."

"India has also attached a condition for payment of 0.2 percent fines in case of Bangladesh failing to repay the loan within 40 years." The senior BNP leader, however, welcomed Mukherjee's visit, who is arriving on Saturday.

"Not enmity, we want an honest and good neighbourly relations with India on the basis of mutual respect and sovereign equality."

BNP standing committee member Nazrul Islam Khan, advisory council member Amir Khasru Mahmud Chowdhury, among others, were present at the conference.

BNP urges no loan deal with India | Politics | bdnews24.com

 

[EjazR]

<i>Facts in loans</i>

While the BNP has alleged that 1.75 percent interest for the $1 billion loan from India is very high, facts about loans taken by different previous governments show that the rate is not high.

The main opposition party also found it disgraceful that the government was signing the loan deal with Indian Exim Bank instead of the Indian government. In practice, most of the bilateral loans are typically signed with national bank of the lending country.

Like any other developing nation, Bangladesh has taken different types of loans and grants from different countries and multilateral donors--sometimes on hard conditions and sometimes soft.

Whenever Bangladesh has taken any hard or tied loan from a donor, the interest rate has ranged between 2 percent and 5 percent.

The loan from India is a commercial or tied loan with a 20-year repayment period having conditions like the borrower has to purchase certain things from the lending country. Such conditions are not unique. Even countries like the USA or Japan had given tied loan to Bangladesh in the past.

When the BNP was in power in the early nineties, it had signed a $109 million dollar Supplier's Credit deal with China to fund the Barapukuria coal mine project that sought 5 percent interest rate and 17 years repayment period. Plus, the loan demanded that at first Bangladesh make a down payment of 10 percent of the total loan.

Former minister and a member of BNP standing committee MK Anwar in a party statement compared the interest rate of the Indian tied loan with that of soft loans sometimes offered by multilateral donors like the World Bank, Asian Development Bank (ADB), and many developed countries.

According to Economic Relations Division (ERD), soft loans are based on grants, and the donors only put a service charge below 1 percent--and no interest rate. While the BNP stated that such loans can be obtained from “any multinational bank”, the fact is, soft loan is very hard to find as the donors impose conditions against them and have their last say about granting it.

Every year, the World Bank and the ADB offer Bangladesh several soft loans. But in such cases, Bangladesh must comply with their conditions. Both these banks select the projects from an array of proposals from Bangladesh and then monitor all the progress. The availability of such loans is also restricted.

Side by side, the ADB offers countries like Bangladesh commercial loans with interest rates swinging between 3 and 5 percent. Bangladesh took such a loan of $250 million at an interest rate of 3.5 percent to support its budget.

Again conditions of tied loans can vary from country to country. For instance, a Chinese tied loan completely restricts Bangladeshi procurement of materials from certain companies. It can even be restricted within a single company and Bangladesh would have no choice. In case with the Indian loan condition, Bangladesh will be compelled to buy materials from India--but from manufacturers selected through a country-restricted tender.

On the question whether it is disgraceful for the country to sign a bilateral loan agreement with a national bank, an ERD official notes, “During the caretaker government's tenure, the government signed a loan with the South Korean Exim Bank. Presently we are negotiating a loan with China for financing a fertiliser factory in Sylhet and introducing 3G technology for the telecom sector of the country. This agreement will also be signed with the Chinese Exim Bank with an interest rate higher than 2 percent.”

 

[EjazR]

I think this prooves that the current Indian loan was better than what any other country has offerred to Bangladesh including China. China gave smaller loans and charged higher interest rates.

 

[Tameem]

Editorial
Daily New Age, Dhaka, Saturday 7th August, 2010.
It is time for govt to desert subservient foreign policy

THE Indian finance minister, Pranab Mukherjee, is scheduled to fly in for a four-hour sojourn in Bangladesh, which by itself perhaps deserves an entry into the Guinness Book of World Record as the shortest state-level visit by any minister anywhere in the world. The short visit has a reasonably long agenda, though. According to a report front-paged in New Age on Friday, Mukherjee will be here mainly to witness the signing of the $1 billion line of credit between the EXIM Bank of India and the Economic Relations Division of Bangladesh, in line with the Dhaka-Delhi joint communiqué released at the end of the India visit of the prime minister, Sheikh Hasina, in January. However, as another report also front-paged in New Age on Friday indicates, he could push for an agreement on waiver of duties on the transportation of over-dimensional cargoes from western India to northeast India through Bangladesh. With one of Hasina’s advisers reportedly ‘in favour of waiver’ and the Awami League-led government having thus far displayed an inexplicable eagerness to grant virtually whatever New Delhi wishes, his visit could add significant momentum towards such an agreement.
If it so happens, it will be doubly delightful for New Delhi; for, it will ensure that India gets maximum returns on the line of credit offered to Bangladesh. As per the terms of the credit, Bangladesh will have to spend the money on the development of infrastructure, which is aimed at facilitating India’s transhipment of goods from its west to northeast. In other words, India will get what it has always wanted but without any expenditure on its part. Moreover, India will get interest on the credit and, if the duty on over-dimensional cargo is waived, it will be all gain and no pain for New Delhi. Simply put, what Bangladesh stands to gain, if anything at all, is inconsequential compared to what India will get.
It is just one aspect in the bilateral relations between the two countries whereby Bangladesh has put in more than its share but India has given up virtually nothing. In fact, India has not shown even the slightest willingness to address the legitimate demands and grievances of Bangladesh. New Delhi refuses to do anything about the killing of Bangladeshis by its border guards, equitable sharing of the common rivers, particularly the Teesta, huge trade imbalance, withdrawal of non-tariff barriers to export of Bangladeshi goods, exchange of enclaves, land border demarcation; the list could go on and on. Moreover, it continues to create more irritants for the already strained relations, e.g. repeated incursion into Bangladesh’s maritime territory, fencing of borders, planned construction of a dam on the upstream of the trans-boundary river Barak at Tipaimukh, etc. Then, of course, there are instances of India promising humanitarian help and not delivering on it such as reconstruction of several hundred houses in the cyclone Aila-hit areas.
India’s selfish exploitation of its bilateral ties with Bangladesh has, of late, been criticised even in its own media. For example, the Indian Express wrote in its editorial on August 3: ‘In case after case, the Bangladeshi side has done its bit, laying the groundwork for further agreement, or implementing what was already signed. And in case after case, the Indian side has not reciprocated to any reasonable degree’ (See today’s Op-Ed page for reprint of the editorial). In other words, the Indian government has made it amply clear that its overarching intention is to squeeze the maximum out Bangladesh in return for virtually nothing.
Hence, it is, perhaps, time that the sympathy and support of the conscious and conscientious sections of Indian society were mobilised so that they may keep pressure on their government to address Bangladesh’s legitimate demands and grievances. At the same time, politically conscious and democratically oriented sections of Bangladeshi society need to put pressure on the government to desert its subservient foreign policy vis-à-vis India or, for that matter, any other country, and assertively raise problems that India refuses to address and secure their resolution for national interest.

 

[idune]

Hasina regime thanking India for “friendship” handcuff.
India: reminding Hasina regime “Loan” is for roads and highway for Indian transport.



Source: Amardesh Online Edition

 

[idune]

I think this prooves that the current Indian loan was better than what any other country has offerred to Bangladesh including China.

Here is indian lie exposed:

Indian robbery in name of loan further exposed by comparative loan provided by South Korea.




Source Links:

UNBconnect... - ROK to give Bangladesh US$200 million soft loan, increase annual grant assistance to $10 mn

$1b Indian credit spending modalities finalized

 

[EjazR]

Why are you comparing a 200 million dollar loan to a 1billion dollar loan. If you compare a similar loan from China it was much higher. Here is what BNP did

$109 million dollar Supplier's Credit deal with China to fund the Barapukuria coal mine project that sought 5 percent interest rate and 17 years repayment period. Plus, the loan demanded that at first Bangladesh make a down payment of 10 percent of the total loan.

Now compare that with 1 billion dollars in a recession hit world economy at 1.75% interest and 20 year repayment period.

Now if you are a patriotic Bangladeshi then you should complain about China debt trap in Bangladesh

 

[idune]

Why are you comparing a 200 million dollar loan to a 1billion dollar loan. If you compare a similar loan from China it was much higher. Here is what BNP did


Now compare that with 1 billion dollars in a recession hit world economy at 1.75&#37; interest and 20 year repayment period.

Now if you are a patriotic Bangladeshi then you should complain about China debt trap in Bangladesh

Another indiotic wish, so let me make things clear. More than amount it is the exploitation using subsurvient Awami regime is the issue.

First: Even with Chinese loan mony was not spent for something that is for Chinese use. Here india is using subservient regime to pay for indian development in name of loan.

Second: Relation with China is matter of Bangladesh NOT indian to say what, how and when.

Third: China is a strategic ally and in different league all togather whereas india is considered enemy state which kills Bangladeshis, occupy Bangladeshi land, interfere with hegemonic ambition and use subservient regime to harm Bangladesh economic and strategic development.

Forth: This is no about india China issue and India can NOT compete with China period.

 

[akash57]

$1 bn loan from India suicidal: Khaleda Zia

DHAKA: Bangladesh's opposition leader Khaleda Zia has termed as "suicidal" the $1 billion deal the government signed with India's Exim Bank last Saturday.

The Sheikh Hasina government has rejected the charge.

"There was no need to borrow the amount from India now. People will have to shoulder the burden," Zia was quoted as saying by a newspaper Monday.

Zia, who is the Bangladesh Nationalist Party's chairperson, called the deal suicidal.

BNP has alleged that the interest on the loan Bangladesh would have to pay would be "seven times higher than the international rates".

The interest rate is 1.75 percent for a 20 year loan that carries a five-year grace period for repayment.

Rejecting the charge, Foreign Minister Dipu Moni said: "When they (BNP) are in power they follow a policy of pleasing India, and when they are in opposition they are vocal against India."

"The opposition is not finding any issue for politicking now, so they are launching pointless campaigns."

In an editorial Monday, a newspaper said that "the interest rate in the commercial category is considered to be rather moderate".

Responding to the BNP's demand that multilateral financing agencies could be approached, the editorial said that soft-term loans with only a service charge are usually difficult to obtain, particularly in the present global financial climate.

"It is not the amount of loan that is so important as the definitive stimulus being provided to a massive undertaking that both sides are obliged to fulfil so that the dividend that Bangladesh is looking for in terms of infrastructure development, removal of trade gaps, service charge revenues and wider regional connectivity are attained by it," the newspaper said.

The loan put "Indo-Bangladesh relations on a new, but potentially stronger footing".

$1 bn loan from India suicidal: Khaleda Zia-Politics/Nation-News-The Economic Times

 

[akash57]

"When they (BNP) are in power they follow a policy of pleasing India, and when they are in opposition they are vocal against India."

When I started reading and learning about Bangladeshi politics, AL was already in power, so I do not know much about BNP's regime. Can anyone tell me if the above quote is true or not?

 

[amit30]

Another indiotic wish, so let me make things clear. More than amount it is the exploitation using subsurvient Awami regime is the issue.

First: Even with Chinese loan mony was not spent for something that is for Chinese use. Here india is using subservient regime to pay for indian development in name of loan.

Second: Relation with China is matter of Bangladesh NOT indian to say what, how and when.

Third: China is a strategic ally and in different league all togather whereas india is considered enemy state which kills Bangladeshis, occupy Bangladeshi land, interfere with hegemonic ambition and use subservient regime to harm Bangladesh economic and strategic development.

Forth: This is no about india China issue and India can NOT compete with China period.

only for 4-5 people present in this forum (no buddy know they are real BD person or not ) not for real Bangladeshis ....

 

[Tanu]

dis money is used for infrastructure development which indias going 2 need since we r providing dem corridor...so y not india pay for it???y do we hav 2 take a loan for their benefit and secondly also da ctizens pay tax for it???its like u take my blood and i pay u cash for it....probably ull put forward dat da economy will benefit oki f9 y not allow foreign investment or more better and a acceptable 1 provide da loan for our energy sector development???

 

[Al-zakir]

BNP urges no loan deal with India

BNP has become a party of cry baby. They are wasted. I am sick and tired of them loosers. Awami selling our country yet this loosers sucking fingers. People will not forgive them cowards.

 

[mohan goyal]

i request pls put off ur anti indian glasses first, now try to look it from an another angle. consider this loan as a FDI in ur country. now tell me u dont want fdi in ur country for infrastructure development??? now if somebody invests then he will definitely wants return on that in ur case it is meagre 1.75&#37; over 20 yrs. now see if GOI can give this to RBI they will get a return of 5% which will be riskfree(T- Bills) and also if u put this in fixed deposit that will give a return of 8-9 % . now if u invest this money for infrastructure that will generate employment in ur country and also GOI donot have exclusive rights to use this infrastructure for themselves, u can also use to generate hell of a business and will increase ur GDP. again if it is a trap u can anytime take loan from anyone else who is providing u at lower rate and return it back.

 

[Iggy]

dis money is used for infrastructure development which indias going 2 need since we r providing dem corridor...so y not india pay for it???y do we hav 2 take a loan for their benefit and secondly also da ctizens pay tax for it???its like u take my blood and i pay u cash for it....probably ull put forward dat da economy will benefit oki f9 y not allow foreign investment or more better and a acceptable 1 provide da loan for our energy sector development???

Lets assume if it is for India's use..is this road used for India's purpose only??it will be also helpful for the Bangladesh too..you can also move your goods and other factors across the country..better infrastructure will always help in getting more and more investments which will be benefit to your country..Its not fair to say India has to solve every problems of your country and help you in every kind..sometimes she has to look after her too ..this corridor will help in earning money to you..lots of trucks will be passing through your country..it will increase the job opportunities in your country in the sectors like hotels,petrol pumbs you name it..and also help Bangladesh products to reach places like China and Nepal via India through road..its not bad as these people spreading around..