Bangladesh to receive first loan from BRICS New Development Bank 

Bangladesh is set to receive a loan from the BRICS-led New Development Bank (NDB) for the first time. The bank will disburse USD 325 million for a pure water supply project, which amounts to approximately Tk 35 billion at the current market exchange rate.  

The approval of this loan proposal is slated for discussion at an upcoming board meeting of the bank. If this loan is approved, Bangladesh is poised to secure a loan from another new multinational bank after the Asian Infrastructure Investment Bank (AIIB). This information has been sourced from the Economic Relations Division (ERD). 

BRICS is an alliance led by Brazil, Russia, India, China, and South Africa. The New Development Bank (NDB) was established by the BRICS states in 2014, with all five countries as founding members.

However, on 16 September 2021, Bangladesh became a member of this bank, expanding the membership to eight countries. In addition to Bangladesh, the United Arab Emirates and Egypt also joined as members. Uruguay is in the process of becoming a new member.  

Two years after becoming a member of the New Development Bank, Bangladesh is set to receive a loan for the first time. The approval for this loan is expected to be granted within the next month. Bangladesh routinely seeks loans every year from four multinational lenders: the World Bank, Asian Development Bank (ADB), Islamic Development Bank, and the Asian Infrastructure Investment Bank (AIIB). 

According to sources from the ERD, Dhaka is eligible to secure a loan of up to USD 320 million from the NDB for the water supply project. The total cost of this project amounts to Tk 41.10 billion, with the implementation to be carried out by Dhaka WASA.

The project concept was approved by NDB on 29 August, and it is currently awaiting approval for the loan proposal from the board. ERD officials have indicated that the interest rate on these loans will range between two and two and a half per cent. 

The project's objective is to enhance the water supply system for the 16 newly incorporated unions within the two city corporations of Dhaka. This initiative will involve the installation of new lines to connect water supply, ultimately providing 70,000 new water supply connections. Recent developments suggest that ERD has conducted a meeting with the project implementing agency regarding the financing of this venture. 

ERD Additional Secretary Anwar Hossain informed Prothom Alo, stating, "Another new source of obtaining loans is the New Development Bank. Discussions are underway regarding the implementation of certain projects with the assistance of loans from this bank. These details will be finalized soon." 

Bangladesh eligible for USD 1 billion 

The New Development Bank has earmarked USD 1 billion for Bangladesh. It is known that Bangladesh is considering taking a loan from this bank for various projects. Prime Minister Sheikh Hasina recently instructed the acquisition of loans from NDB during the Executive Committee of the National Economic Council (ECNEC) meeting. A new unit has been established at ERD to oversee loans from the NDB, with a Deputy Secretary appointed to lead this unit. 

Following the Prime Minister's directives, ERD Secretary Sharifa Khan initiated efforts to execute new projects using funds from the NDB. For instance, a project to construct 500-bed hospitals in Jashore, Pabna, Noakhali, and Cox's Bazar under the line of credit (LoC) from India was initially allocated USD 180 million.

However, due to various complications, the project was removed from the LoC list on 22 June 2021. Currently, steps are being taken to implement this project using funds from the NDB. Additionally, discussions are ongoing regarding the construction projects for Jamalpur Medical College and Hospital. 

In relation to obtaining a loan from the New Development Bank, Executive Director of the South Asian Network on Economic Modeling (SANEM), Salim Raihan, conveyed to Prothom Alo, "Welcoming a loan from this bank is crucial as it diversifies our sources of foreign loans. This stands as a positive example of South-South cooperation. We've advocated for an increase in South-South cooperation for a considerable period. There's a demand for foreign loans in our country as well." 

He also emphasised that the loan funds must be utilised efficiently, ensuring no wastage.

*This report, originally published in Prothom Alo print edition, has been rewritten in English by Farjana Liakat