Kazi Zahidul Hasan :
Bangladesh has become the second largest recipient of Chinese fund in south Asia after China’s commitment to $31 billion worth of funding in local projects focusing on roads, railways, power plants and water treatment facilities.
If the Chinese private sector investments are put together into calculation, the figure rises to over US$ 40 billion.
But the economists issue cautionary notes to the Chinese funding in local infrastructure schemes as it would mostly come through high cost of commercial loans.
“China has promised to finance dozens of big projects in Bangladesh as part of its growing interest in South Asian countries,” economist Ahsan H. Mansur told The New Nation yesterday.
He said, “Definitely, Bangladesh will get benefit from the Chinese funding when the country requires huge foreign fund to develop its flagging infrastructure. But if we look at the funding pattern, it might not be viable for Bangladesh because of high interest rates.”
Dr Ahsan Mansoor, however, said that Bangladesh should properly assess the viability of Chinese loans to avert a long-term economic pain. “High cost foreign fund can put the country into debt trap which happened to Sri Lanka and Pakistan,” he cautioned.
Beijing has committed to spend $60 billion on roads, railways and power project in Pakistan as part of the China-Pakistan Economic Corridor.
“China is a resource surplus country. So, the country goes for massive oversees lending with high interest rates to maximize returns from its excess funds. But Bangladesh should look for concessional project loans considering their economic viability,” said Dr. Ahsan H. Mansur, Executive Director of Policy Research Institute of Bangladesh (PRI).
He said also that though China has committed for big funding for local projects, the country’s development assistance for Bangladesh is still insignificant.
“China is heavily investing in building mega infrastructure projects in Sri Lanka, Pakistan and Nepal as part of its Belt and Road Initiative,” economist Dr Zahid Hussain told The New Nation.
He said, Bangladesh is also a strategic location in the China’s ambitious project. So, the country concentrates on Bangladesh afresh and offering funding to its mega projects to put forward the Belt and Road Initiative.
“But the Chinese funding to local projects is highly risky because of their stringent conditionalities. These are hard term loans, which may affect viability of the proposed projects. It would also increase debt payment liabilities of Bangladesh,” said Dr Zahid Hussain.
