Kazi Zahidul Hasan :
As Bangladesh heading for China to borrow more money to fund large infrastructure projects, many raised questions about the risks of such credit. They also brought to fore of ‘debt trap diplomacy,’ citing global experience in Chinese loans.
The Centre for Policy Dialogue (CPD), a private think tank, on the other day urged the government to follow a cautious approach regarding Chinese investment coming through ‘Belt and Road Initiative (BRI)’ in Bangladesh to ensure national interest in the long term.
It also raised question over the transparency in loan deals with China because people remain in dark about such deals.
“The government should be more careful on Chinese project loans as most of those are coming through debt financing. All project loans should be taken after proper feasibility study and future risk assessment,” Dr Ahsan H Mansur, Executive Director of Policy Research Institute (PRI), told The New Nation on Sunday.
However, he said, Chinese investment has created a new opportunity for Bangladesh when it suffers from resource constraint to develop its mega infrastructure projects. But there will be risk if we fail to negotiate the terms ineptly and ensure transparency. “We are taking loans from traditional sources and those are not adequate for funding the future projects,” he added.
When asked, Dr Ahsan H Mansur said, “It is too early to say that Bangladesh is falling into a debt trap because disbursement of Chinese pledged loan is still insignificant.” China has so far pledged $38 billion BRI-related investment in Bangladesh, according to an estimate by British Bank Standard Chartered.
Citing global experience of Chinese loans, Dr Ahsan H Mansur said, “Some countries like Pakistan and Sri Lanka fell into Chinese debt trap as they took projects without assessing their viabilities properly.
“So, Bangladesh should also take the lesson and engage in viable projects from Chinese loans. Otherwise, growing reliance on Chinese money will make Dhaka beholden to Beijing.”
Bangladesh’s total external debt at the end of 2018 stood at around $33.1 billion, and the share owed to China accounts for just 6 per cent of the total debt, officials said.
“China set to pump huge fund into Bangladesh through the BRI. But, we also have to follow a cautious approach to preserve the national interest in the long term,” said Dr Fahmida Khatun, Executive Director of CPD.
She said Chinese investment coming through BRI around the world has already raised controversy due to lack of transparency in Chinese aided projects.
“Countries also often struggle to pay off Chinese debts highlighting the debt-trap narrative around Chinese loans. “We have already seen such instances in Sri Lanka when the island country was compelled to lease out a whole seaport to China as it failed to pay off Chinese debt. So, we have raised concerns over the Chinese funded BRI projects in Bangladesh,” she added.
Beijing and Dhaka signed deals worth $21.5 billion covering 27 infrastructure projects during President Xi Jinping’s Bangladesh visit in October 2016.
“Chinese loan in Bangladesh presents both risks and opportunities. Prospects will be immense if we can utilize Chinese funds in economically viable projects. Otherwise, it may pose an economic burden for us,” said Dr Zahid Hussain, lead economist of the World Bank’s Dhaka office.
When asked, he said, “The loans granted to Bangladesh by China so far are not as big that could point a debt trap scenario.”
