AIIB to lend $200m to boost private sector

The Asian Infrastructure Investment Bank (AIIB) is giving a $200 million loan to Bangladesh to implement a project to promote infrastructure investment by providing long-term financing to the private sector.

The Finance Ministry’s Economic Relations Division (ERD) and AIIB signed a loan agreement in this regard on April 26.

ERD Additional Secretary Shahriar Kader Siddiky and Dong-lk Lee, the director general of Investment Operations at AIIB, signed the agreement on behalf of Bangladesh and AIIB, respectively, according to an ERD press release.

The move is aligned with the country’s goal to bridge its infrastructure deficit and achieve sustainable growth, as highlighted in Bangladesh’s Perspective Plan 2021-2041. The “IDCOL Multi-Sector On-Lending Facility Project” will be financed by the loan, which will be on-lent to Infrastructure Development Company Limited (IDCOL), read the release.

IDCOL will further on-lend the amount to private-owned companies (sub borrowers) in the country to support eligible infrastructure projects.

The project will provide IDCOL with additional resources for long-term financing, given the huge market requirement and the need to scale up the availability of long-term financing for infrastructure projects in Bangladesh.

The loan will be received under standard terms and conditions of AIIB. The repayment period is 18 years which includes a five-year grace period, said the press release.

For this loan, the government will pay 0.25 per cent as front-end fee and the commitment fee is 0.25 per cent annually for unspent money. The interest rate is set at 0.60 per cent.