The Asian Development Bank (ADB) loans for its developing member countries, including Bangladesh, are likely to be costlier with a change of its lending policy.
Officials said Wednesday the Manila-based lender in its annual meeting in Baku next week (May 2-5) is going to put in place the new lending policy for its developing member-countries with approval from the board of governors.
The soft window of the ADB -- Asian Development Fund (ADF) - is likely to be merged with the hard-term lending arm, styled, Ordinary Capital Resources (OCR), approval for the new policy from the ADB Board of Governors at the Baku meeting next week, said a senior Economic Relations Division (ERD) official.
An ADB Dhaka office spokesperson, Govinda Bar, also told the FE that the board of governors of the ADB in next week's annual meeting is likely to endorse the new lending policy.
"Basically the ADB has taken the plan of changing its lending policy in a bid to mobilise more funds from the international markets. This new policy will improve the rating of the ADFB and thus it will be able to borrow more money from the market for providing to its member-countries," he said.
After merger of the ADF with the OCR, the Bank will offer higher-rated loans from the OCR. Under the OCR, two lending windows --concessional and non-concessional -- have been proposed to be opened, the ERD official said.
Bangladesh currently borrows from both the lending windows of the ADB for financing its development projects.
During 2011-2015 period, the development financier has earmarked $2.4 billion loans from the ADF and $2.1 billion from the OCR.
Saifuddin Ahmed, a joint secretary at the ERD, said they were hopeful about getting more funds from the ADB after giving effect to the new lending policy.
"Currently, we are getting nearly $900 million worth of funds per year (as commitment) from the Asia- Pacific lender for development of the country's infrastructure and poverty cuts," he informed.
According to the current terms and conditions, Bangladesh gets loans from ADB's soft window, ADF, at 2.0 per cent rate. The maturity period is 25 years with a 5-year grace period.
On the other hand, the country borrows from OCR at LIBOR-plus-50 basis points. In addition, the borrower needs to pay 0.1 per cent maturity premium on the total credits, and 0.15 per cent commitment fee for the undisbursed amounts of the credits.
The ADB selects status of the borrowing countries on the basis of per-capita income, poverty situation and so for concessional or hard-term lending.
"Since Bangladesh's economy is developing year-on-year and it is going to graduate as a middle-income country within a few years, the Manila-based lender is likely to stop the concessional loans and offer the non-concessional loans from the OCR," said the ERD official.
A top government official said the new lending policy will make Bangladesh's borrowing from the ADB costly.
The ADB is the second-largest development partner of Bangladesh followed by the World Bank. It bankrolls projects in different sectors of Bangladesh -- like transport, energy and power, health, education and environment development.
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