Repayment of Russian loans to be delayed, Chinese credit on hold

The government has taken fresh measures to ease the pressure of foreign debt payments. Payments of Russian loans on the Rooppur nuclear power plant project are to be deferred for two years, and Russia has already responded positively to the proposal from Bangladesh. If payment of the Russian debt instalments is deferred for two years, the government can save about USD 800 million now, according to sources at the Economic Relations Division (ERD).

Officials said the ERD is working on amending the previous loan agreements and a draft has been finalised, followed by sending it to the Ministry of Science and Technology and other ministries concerned.

In the meantime, the government has decided to back off from the plan to take Chinese loans equivalent to USD 5 billion amid the changed political situation. These loans were supposed to be received in Chinese currency yuan.

According to the ERD sources, the government wants to defer the payment of the instalment of the loans on the Rooppur nuclear power plant project on the ground that the country's economy is still under pressure due to Covid-19 and the Ukraine situation. On the other hand, a decision has been taken to run proper scrutiny before taking any bilateral loans from China due to the changed political situation. Officials said ERD received such instructions from the policymakers.

Salim Raihan, executive director of South Asian Network on Economic Modeling (SANEM), said there is still pressure on foreign debt payment, and it is a good initiative to defer the payment of the debt capital of the Rooppur nuclear power plant construction. Like the Rooppur project, negotiations should also start to defer payment of debt capital on such other projects, and for this, it is necessary to form a high-powered committee.