AIIB to give $250m loan to Bangladesh for Covid response

China-backed Asian Infrastructure Investment Bank will give a US$250 million loan to Bangladesh to mitigate the country’s adverse economic effects of the coronavirus pandemic.

The loan, which aimed at funding the country’s poor and most vulnerable, particularly those affected by job losses in small and medium enterprises and the informal sector, will be  used to implement a project titled ‘Sustainable Economic Recovery Programme (Subprogramme-1)’ for early recovery of the economy. To this effect, an agreement signing ceremony was held virtually on November 2.

Secretary of the Economic Relations Division Fatima Yasmin and vice president of AIIB’s investment operations region 1 DJ Pandian, signed the loan agreement on behalf of their respective sides.

The government has taken the project with an aim at bringing policy reform to recover the country’s economy from the adverse effects of Covid-19 and to sustain sustainable economic growth. The lead financier of the programme is the Asian Development Bank while AIIB is contributing $250 million as the co-financier.

Under this programme, steps will be taken to reduce and rationalise expenditures by reforming and strengthening the Public Finance Management system and to expand financial resources.

The programme also aims to create financing opportunities for industries and entrepreneurs such as small, medium and cottage industries whose sources of funding are inadequate.

The loan will be received with standard terms and conditions of AIIB. The repayment period of the loan is 20 years including three years grace-period. The payable frontend fee is 0.25 per cent while commitment fee is 0.25 per cent per annum for the undisbursed amount, according to the signed agreement.