Bangladesh plans to take a hard loan of $600m from the World Bank for a short term along with a soft loan for the country’s productive infrastructural projects, said official sources
The government has also taken an initiative to start the second phase of the Investment Promotion and Financing Facility (IPFF) project.
Finance Division officials said the global lender has come up with a fresh proposal and the division and Bangladesh Bank are now reviewing that proposal.
The loan will be taken from the “Scale-up Facility” fund of the World Bank Group’s International Development Association (IDA).
According to the proposal, the weighted average interest rate will be 1.60% which the government thinks “acceptable.”
The IDA-funded IPFF project has played a role in enhancing technical capacities of the Public-Private Partnership initiatives.
However, the IDA’s soft loans will be reduced gradually and as a result the hard loans will be necessary for the development projects.
With the help of the global lender, the government has been implementing the IPFF projects since 2007.
Bangladesh Bank has executed the IPFF projects signing an administrative contract between Finance Fivision and Bangladesh Bank.
The main objective of the project is to develop the infrastructure with long-term low-interest financing as there is a lack of capacity of the local banks and financial institutions.
In the first phase of project, the World Bank gave a total of $50m while $60m came from the government, of which 98% used for the first three years.
Under the IPFF initiative, a total of seven power plants were built in the private sector, adding 178 megawatt of electricity to the national grid.
After evaluation of the first phase of that project, the World Bank has increased financing five times in the second phase.
There is a target of a total of $307m funding in the running of the second phase of the project that will end in December, 2016.
For the 365MW capacity of four power plants, the water treatment plant, an inland container depot and a nationwide project to establish a fiber-optic cable network has nearly $80m long-term loan.
In the meantime, the government’s counterpart funds are equivalent to approximately $30m.
The government has already received nearly $81.8m, which has been submitted to the government treasury. There is no pending of loan instalments under the private sector debt during last three years, according to the latest data of the project.
Source: Dhaka Tribune
