AIIB to lend Bangladesh $3b for dev projects

The Asian Infrastructure Investment Bank (AIIB) has committed to provide $3 billion in loans for Bangladesh’s infrastructure development in the next two to three years.

Like the World Bank, the Asian Development Bank (ADB), and the Japan International Cooperation Agency (JICA), the AIIB is now increasing its investment in different infrastructural development projects as Bangladesh is gaining confidence among the lenders, a senior official of the Economic Relations Division (ERD) told The Business Post.

“An agreement on the loan has been signed. The AIIB has so far promised $5.5 billion in loans for various infrastructural development projects in Bangladesh,” he also said.

The AIIB started its activities in the country in 2016. In this short period, it has already invested $2.5 billion in 13 development projects that are going on in full swing.

According to the ERD, Bangladesh will have to repay the $3 billion loan in 20 years with a grace period of three years.

For this loan, a commitment fee of 0.25 per cent as front fee and annum on unspent money has to be paid.

The interest rate on the loan will be determined by combining the reference rate and variable spread rate with Liber (interest rate on London International Bank transactions).

ERD Deputy Secretary Kawsar Jahan said, “The AIIB is now ready to invest $3 billion in development projects of Bangladesh like the World Bank, the ADB, and the JICA.”

The AIIB has given $250 million in loan for Bangladesh’s sustainable economic recovery from Covid-19. The loan will be used to implement a project titled “Sustainable Economic Recovery Programme (Subprogramme-1)”.

The lender has given $260 million in loan to construct the Kewatkhali Bridge over the Brahmaputra River in Mymensingh to ensure easy and smooth communication between the capital and other parts of the country.

Under this project, a 1,100m steel arch bridge will be constructed. The other components of the project are a 780m approach bridge, a 551m road overpass, a 240m railway overpass, a 6.2km highway with four lanes, including a slow moving vehicular traffic (SMVT) lane, and a toll plaza.

The other projects that the AIIB has given loans for are: $400 million for SASEC Dhaka-Sylhet Corridor-6 Lane Road Development, $80 million for Dhaka Sanitation Improvement, and $200 million for Bangladesh Rural Water, Sanitation and Hygiene for Human Development.