Japan has confirmed JPY338.247 billion, equivalent to $3.2 billion, in assistance for Bangladesh to implement seven development projects in the country.
Both countries signed the 41st Official Development Assistance (ODA) loan package on Wednesday at the conference room of the Economic Relations Division (ERD).
The largest-ever single loan package would be operated through the Japan International Cooperation Agency (Jica).
Japanese Ambassador to Bangladesh Ito Naoki and ERD Secretary Fatima Yasmin signed the ODA's exchange of notes. Chief Representative of Jica's Bangladesh Office, Hayakawa Yuho and the ERD secretary signed a loan agreement.
ERD officials said the deal was scheduled to be signed by June this year, but Jica delayed it because of Covid-19.
With this loan agreement, doubt over Japan's financing for important projects – such as two metro railways, a separate railway bridge over the Jamuna River and the expansion of Dhaka International Airport – is over.
The Japanese government has also reduced interest rates on their package loans at this time of the Covid-19 pandemic.
Jica reduced the interest rate to 0.65 percent for the 41st package, which is 0.25 percentage points lower than that of the 40th package. The interest rate of the 39th package was one percent.
With another 0.01 percent for consulting services, the loan from Jica is the most concessional compared to those of the World Bank, Asian Development Bank (ADB) and other development partners.
The government would repay the loan in the next 30 years while a 10-year grace period will be available.
Under the package, Japan will provide 72.194 billion yen for the Dhaka Mass Rapid Transit Development Project (MRT line 6), which is the fourth tranche of support from Japan for the project.
Japan is starting its financing for MRT Line 5's northern route, another metro rail project, with 55.696 billion yen.
The package also includes 89.016 billion yen to implement the Jamuna Railway Bridge Construction Project. The amount is the second tranche of Japanese assistance for the project.
Japan will also disburse 80 billion yen for the Hazrat Shahjalal International Airport expansion project as the second tranche under the package.
The Chattogram-Cox's Bazar Highway Improvement Project would be implemented with a 1.906 billion-yen loan support from Japan. Some 11.218 billion yen will be disbursed for the Food Value Chain Improvement Project.
Japan will provide 28.217 billion yen to implement the urban development and city governance project.
With the 40th loan package, Japan had a deal to provide $2.51 billion. One part of the package was signed on June 30 last year in Dhaka. Another part was signed during Prime Minister Sheikh Hasina's visit to Japan during May 28-31 last year.
The government signed a $1.83 billion loan agreement with Japan under the 39th loan package on June 14, 2018. On June 29, 2017, Japan signed a deal with Bangladesh to provide $1.64 billion in loan.
Officials at the loan signing meeting said the government of Japan has provided approximately $13 million in emergency support to tackle Covid-19 in Bangladesh through Jica and provided personal protective equipment to hospitals.
Japan and Bangladesh signed the exchange of notes on the Japanese grant for the Economic and Social Development Programme, worth $10 million, for medical equipment that included a CT scanner and x-ray machine, on July 16 this year.
This aid focused on the medical and health sectors currently combating the novel coronavirus.
On August 5 this year, both countries signed an exchange of notes for the Covid-19 Crisis Response Emergency Support Loan amounting to $331 million; which was the first budget support from Japan to Bangladesh.
The purpose of the financial assistance is to provide funding for additional financial expenditures by the Bangladesh government to implement the stimulus packages.
Japan will continue to extend its support for the development of Bangladesh as the country is on its way to achieving the highest growth in Asia this decade, said Japanese Ambassador to Bangladesh Ito Naoki.