Power Grid Company of Bangladesh Limited has proposed to increase the cost of Chinese-funded Power Grid Network Strengthening Project by Tk 622 crore even before its beginning because of delay in signing financial loan deal for the project. The company, the implementing agency of the project, wrote to the planning commission on September 30 proposing escalation of the project cost to Tk 14,326 crore from Tk 13,703.30 crore, as per local daily reports. The country’s external credit would be more than double in 2022 – just in a span of five years – amid high growth of suppliers’ credits and short-term borrowings to finance infrastructure projects, according to the Finance Ministry’s medium-term macroeconomic outlook. The high growth of such loans taken mostly on ‘political consideration’ with high interest rates against short maturity period would increase significantly after 2022. But suppliers’ credits are the worst form of loan as borrowers have no choice to select the goods suppliers.
Ultimately this will be a very tough burden for the nation to bear. High interest rates coupled with an almost exponential growth in loans will result in significant long term damage to our Balance of payments. As it is we are dependent on only two sectors–remittances and RMG, to ensure that our overall balance stays in the black. In other words, we are dependent on the blood and sweat of our workers to ensure that we have a healthy balance, as both these sectors are heavily dependent on labour as they are both labour intensive. Spending money on prestige projects which have no sound economic rationale is a complete waste of our foreign exchange. The only inevitable result will be that our balances will stealthily but surely move into the red.
So before such so-called prestige projects will be rolled out there must be a proper cost and benefit analysis to ensure that they are indeed good for the nation. Projects taken on vanity or for political considerations must be discarded — the nation can’t afford to waste a single dollar of the sweat of our hard earned resources.
