Bangladesh will remain a priority market for the Asian Infrastructure Investment Bank (AIIB) in 2019 as the country’s economy is growing fast, said a new report released in Beijing today.
Infrastructure investment opportunities continue to be significant across Asia, including in Bangladesh, despite current market uncertainty and short-term challenges, according to the report of “Asian Infrastructure Finance-2019”.
In contrast to other countries in the report, a marginal reduction in infrastructure borrowing costs over the next 12 months is expected in Bangladesh due to a more competitive domestic financing environment.
In other words, lending spreads are expected to narrow as the financial sector strengthens, due to more long-term lenders in the market.
However, currency volatility could affect project financing, although multilateral development banks are expected to help with the hedging challenge.
Speaking at the report unveiling function at AIIB headquarters at Beijing in China, AIIB Vice President Policy and Strategy Joachim von Amsberg said, “Bangladesh is a fast-growing economy and it is improving economic conditions presents a great opportunity to address infrastructure shortfalls.”
“We remain committed to working with the Bangladeshi government and other partners to identify infrastructure projects that are financially sound and have the potential for significant economic impact,” he added.
AIIB is actively reviewing several projects in the transport, energy and water sectors including the Mymensingh Kewatkhali Bridge Project and the Sylhet to Tamabil Road Upgradation Project.
To date, AIIB’s Board of Directors has approved up to US$274 million for three projects in the energy sector.
As governments grapple with the need for macroeconomic stabilization and sustaining a high level of infrastructure investment to meet growing demands, AIIB is developing strategies to help its members respond to short and long-term challenges in infrastructure development.
AIIB Principal Economist Dr. Jang Ping Thia said there is growing awareness of Bangladesh’s economic potential. “Improving on construction costs and project implementation would further accelerate private sector investments,” he added.