The Japan International Cooperation Agency (JICA) will provide a total of 120.986 billion yen ($1.18 billion) soft loan to Bangladesh for implementing five development projects.
This will be the largest ever Official Development Assistance (ODA) loan made to Bangladesh so far by Japan, the single largest bilateral development partner of the country, officials said.
The Government of Bangladesh on Monday inked five deals with JICA at a ceremony held at Pan Pacific Sonargaon Hotel in the capital on Monday afternoon.
Economic Relations Division’s Secretary Mohammad Mejbahuddin and Mikio Hataeda, Chief Representative of JICA Bangladesh Office, signed the agreements on behalf of their respective sides.
Finance Minister Abul Maal Abdul Muhith and State Minister for Power and Energy Nasrul Hamid Bipu and JICA President Akihiko Tanaka were present at the signing ceremony.
As per the agreement, the five projects will be implemented under the sectors of power, energy, city governance, flood management and agriculture productivity.
The titles of the projects are as follows:
1. Construction of Matarbari Ultra Super Critical Coal-Fired Power Project (I) (41,498 million yen)
2. Small and Marginal Sized Farmers Agricultural Productivity Improvement and Diversification Financing Project (9,930 million yen)
3. Natural Gas Efficiency Project (23,598 million yen)
4. Inclusive City Governance Project (30,690 million yen)
5. Haor Flood Management and Livelihood Improvement Project (15,270 million yen)
These will be concessional loans and Bangladesh will have to pay only 0.01 per cent interest rate per annum, with a 40-year repayment period and a 10-year grace period, said a senior Economic Relations Division (ERD) official.
He added, the Japanese Development Agency would provide the financial assistance under its 35th ODA Package.
This is the largest Japanese ODA Loan and it will support economic growth and poverty reduction, said a JICA official.
According to JICA, Bangladesh has maintained an annual economic growth averaging six percent over the past 10 years mainly through developments in the garment industry. With a large, inexpensive labor source and a corresponding potential market, Bangladesh has attracted attention from foreign countries, including Japan, in recent years as a newly emerging nation that could serve as a promising production base or investment location.
However, urban infrastructure and the power supply in particular have not kept pace with the rapid urban development and increase in economic activities accompanying economic growth, and the lack of infrastructure hampers further economic growth and investment.
In rural areas, improvements in agricultural productivity and measures for natural disasters are not sufficient, and there are concerns about the widening socioeconomic gaps between urban and rural areas, as well as about food security due to the increasing population.
“These five projects will provide assistance to improve these circumstances in both urban and rural areas,” it added.
