The government has redefined its non-concessional loan by lowering the amount of grant element to 25 percent. Previously, the rate was 35 percent — which means foreign aids with less than 35 percent grant element was to be treated as non-concessional loan.
For example, if the government previously took a foreign loan of Tk100, Tk35 of it was treated as grant and the remaining Tk65 was the actual value Bangladesh would pay back.
According to the new ceiling, Bangladesh will take Tk100 foreign loan in which Tk25 will be treated as discount features, and the country will have to pay back Tk75 as concessional loan.
This move will loosen up pressure on the standing committee on non-concessional loan and make process of taking foreign loans easier.
A meeting of the Cabinet Committee on Economic Affairs led by Finance Minister AHM Mustafa Kamal approved a proposal on the matter on Wednesday.
The minister briefed the press after the meeting.
"We are doing good now. We have elevated ourselves to a higher position from the low income country status. We used to miss numerous facilities while perusing foreign loans with 35 percent grant elements," said Kamal.
He was asked whether there will be any issue to get loans if the grant element remains 35 percent. The finance minister said: "We have no trouble in getting loans. We did it from our concern. The World Bank and others also want this as Bangladesh elevated from its previous economic status."
He said, "We used to consider a foreign loan on the basis of the grant element. We have now reduced it to 25 percent, which shows the improvement in our financial capacity."
Approval of three purchase proposals at Tk1,739 crore
After the economic affairs meeting, the cabinet committee meeting on purchase approved three projects, including construction of the Baraiyarhat 50MW solar power plant in Chattogram.
The total cost for the three projects was estimated at Tk1,739 crore, Cabinet Secretary Mohammad Shafiul Alam told reporters. The finance minister chaired the meeting.
The secretary said, "The meeting approved the purchases for construction of the 50MW power plant. For the 20-year-long project, cost has been estimated at Tk1,418 crore, and the Bangladesh Power Development Board will implement it."
Elaborating the projects, Shafiul Alam said, "Two organisations responded on the Build, Own and Operate basis to the open tender, which was floated under the Private Sector Power Generation Policy 1996.
"Among them, the consortium of German solar developer, ib vogt GmbH, and their local partner, AG Agro Industries Ltd, secured the tender on no electricity, no payment basis," he added.
Other approved proposals
The meeting approved the purchase proposal of appointing consultant for a package service of 'export competitiveness for jobs' project. The estimated cost for it is Tk43 crore, and the ministry of commerce will implement it.
Moreover, the meeting approved the variation purchase for the Moheskhali channel and the Bakkhali river slope protection under the Cox's Bazar Airport Development (1st Phase) project. The estimated cost has been raised to Tk278 crore which previously was Tk87 crore.