Wednesday, 1 December, 2021

ADB to give $650m for key road corridor, economic recovery

  • Staff Correspondent
  • 5 October, 2021 12:00 AM
  • Print news
ADB to give $650m for key road corridor, economic recovery

Asian Development Bank will provide $650 million to Bangladeshas fresh loan for sustainable economic recovery and improving a key road corridor.

Two separate loan deals were signed between the Manila-based lender and Bangladesh government at a function in Dhaka on Monday.

Economic Relations Division (ERD) secretary Fatima Yasmin and ADB’s outgoing country director in Bangladesh Manmohan Parkash signed the loan deals on behalf of their respective sides, a finance ministry release said.

Of the loan, $250 million will go to Sustainable Economic Recovery Program– Subprogram 1 and $400 million will be provided as tranche-1 loan for “South Asia Sub-Regional Economic Cooperation (SASEC) Dhaka-Sylhet Corridor Road Investment Project.”

Finance Division has formulated the Sustainable Economic Recovery Programme as part of policy reform to mitigate the adverse economic effects caused by the COVID-19 pandemic.

The programme will be implemented by the Financial Institutions Division, National Board of Revenue, Bangladesh Bank and Central Procurement Technical Unit (CPTU).

The programme scope includes strengthening public financial management systems and improving access to finance for underserved market segments.

The prior actions of thisprogrammehave been achieved by 30 September 2021. In the next financial year, the succeeding component under this programme, Subprogram 2 worth $250 million is expected to be signed.

In May last year, ADB financed $500 million for “COVID-19 Active Response and Expenditure Support Programme” and in June this year, a loan of agreement $250 million for “Strengthening Social Resilience Programme (Sub program 1)” was signed.

Proceeds from these two loans are being used as budget support to mitigate the adverse social and economic impact caused by the COVID-19 pandemic.

The main objective of SASEC Dhaka-Sylhet Corridor Road Investment Project is to improve the sub-regional transport and trade through upgrading the corridor (209.33km) to a four-lane standard with feature of slow moving vehicular traffic (SMVT) lane.

Under the project, the improvement work includes gender responsiveness and major road safety features, for example, to build new pavements, bridges, flyovers, straightening of curves, railway overpass and safe entries or exits to main roads.

The project will also improve the institutional capacity of Roads and Highways Department (RHD) and efficiency, connectivity and safety of the Dhaka-Sylhet international corridor.

It will also reduce Dhaka-Sylhet travel time by approximately 2 hours. It will form part of the Asian High way, South Asia Subregional Economic Cooperation (SASEC) corridor, BIMSTEC and SAARC Highway corridor and will have a great impact on socio-economic development in the project area.

The project was approved on 16 February 2021 by the ECNEC at an estimated cost of Tk169.19 billion.

Of the amount, the government will provide Tk 36.74 billion or $433.24 million and the rest of money will come as ADB’s loan.

The project implementation duration is from 01 January 2021 to 31 December 2026. This will be implemented by Roads & Highways Department under the overall supervision of Road Transport and Highways Division, Ministry of Road Transport and Bridges.

The project work will be run under the Multi-Tranche Financing Facilities (MFF) of ADB.

ADB will provide $1,780 million as OCR loans in four tranches under the MFF, which is the highest financing ever proposed by the ADB against any single project.

OCR is London Interbank Offered Rate (LIBOR) based loan. It is repayable in 25 years including a five-year grace period with an interest rate of LIBOR +0.5 percent and maturity premium of 0.1 percent.

In addition, a commitment charge of 0.15 percent applies on the undisbursed amount.

Meanwhile, Finance Minister AHM Mustafa Kamal spoke at the farewell ceremony of ADB’s outgoing country director Manmohan Parkash.

Kamalsaid during Manmohan’s four-year tenure relationship between Bangladesh and ADB reached to a new height.

“It is indeed a very gloomy day for us as we have to say goodbye to one of our best friends, the ADB country director Manmohan Parkash,” he said.

Finance minister said Bangladeshi citizens are indebted to his family as his valiant father fought for the cause of independence of Bangladesh as a member of Indian Air force.  “Now he made us indebted through his four years of outstanding commitment and services towards the development journey of Bangladesh,” he remarked.

At the same time, the finance minister welcomed the new ADB country director EdimonGinting and assured him of all kinds of cooperation.  Finance Secretary Abdur Rouf Talukder and other senior government officials were also present at the event.