Anisul Islam Noor :
The government’s borrowing for setting up power plants has increased in recent years, creating additional burden on the economy, experts said.
Particularly hard term loan at high interest and suppliers’ credit are going to create the loan trap for future when the government may be forced to repay loan as the users organization of this credit may fail to repay.
Finance Ministry officials feared that the dependence on supplier’s credit for setting up power plants would soon increase the government’s debt burden.
In recent years, state run Power Development Board borrowed $1.5 billion at a high rate of interest for setting up three dozen power plants, as it did not get soft term credit from multilateral sources.
The officials of the debt management wing of the finance ministry said another $ 5 billion in suppliers’ credit was in the pipeline for setting up several power pants by the PDB. At a meeting last month it was apprehended that the PDB, which does not follow the guidelines for the hard term loan management, might not be able to repay the loans.
They also expressed fears that eventually the government, being the guarantor, would have to repay the hard term loans.The proposed construction of Rooppur Nuclear Power Plant at an estimated cost of $13.5 billion with supplier’s credit from Russia would further increase the burden of hard term credit on the government.
From 1972 to July 2014, Bangladesh borrowed $62.39 billion, mostly soft term loans, from multilateral as well as bilateral sources. But in recent times, the country’s borrowings on hard terms, mostly suppliers credit, exceeded the borrowings on soft terms.
Debapriaya Bhattacharya of Centre for Policy Dialogue said that the government’s dependence on hard term suppliers’ credit increased in recent years.
The reason, he said, was that the government was not getting all the credit needed for growing development activities on soft terms. The incumbent government struck a series of deals with a number of countries to get suppliers’ credit, he said.
The government imported military hardware from Russia worth $ one billion under supplier’s credit. It borrowed $ 450 million from Russia under hard terms for the feasibility studies of the Rooppur Power Plant.
The government took $ 800 million in supplier’s credit from India for infrastructural development and import of buses. For the ongoing purchase of Boeing aircraft, the government would receive a total supplier’s credit of $1 US.
Though the ministry official are concerned over increasing foreign loan, Finance Minister AMA Muhith said, the increased hard term borrowings for development projects would create no problems at all.
