Indian credits to be downsized
The three Indian lines of credit (LoCs) amounting to about $7.4 billion are set to be downsized as many of the projects are riddled with different types of complexities that have slowed down their progress.
The decision came yesterday on the last day of the two-day India-Bangladesh bilateral meeting to review the Indian-funded projects.
For all latest news, follow The Daily Star's Google News channel. A joint technical committee will be formed to work on finalising the fate of the projects and the funding.
"I would not call it downsizing -- I would rather say that the LoCs would be right-sized and rationalised," said a top official of the Economic Relations Division, the finance ministry wing that deals with foreign loans.
Asked about the reasons for the delay in the projects, the official said, "Some were delayed because of our faults and some for their fault."
As a result, the meeting has decided to cut short the funds.
After further discussions, it will be decided by how much the LoCs will be rationalised and which projects would get the chop.
No contracts were signed between the two countries for at least 22 projects involving $4 billion.
Those projects will be reviewed, the ERD official said, adding that the opinions will be sought from the projects' line ministries.
It was also agreed in the meeting that future projects would not be lumped under the LoCs; those will be taken care of on a standalone basis.
The Indian side has reassured that the interest rate on the loans under LoCs will remain at 1 percent, the ERD official added.
Of the three LoCs signed since 2010, only $1.88 billion has been disbursed so far and Bangladesh has repaid $254 million as of June last year.
The first LoC, worth $862 million for 15 projects, was signed in 2010. The second worth $2 billion for 12 projects was signed in March 2016.
In October 2017, the third credit deal, amounting to $4.5 billion, was signed for 15 projects.
Of the 42 projects under the three LoCs, 14 have been completed at a cost of about $410 million, or around 6 percent of the overall commitment under the first two credit deals.
According to the terms of the deals, all project-related materials must be procured from India and all contractors and consultants must be hired from that country.
Mirana Mahrukh, additional secretary of ERD, and Suja K Menon, joint secretary of India's ministry of external affairs, led the meeting from their respective sides.
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