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Japan offers record $3.15b credit line

Metro rail project to get one-third

FE REPORT | August 13, 2020 00:00:00

Japan on Wednesday confirmed a record US$3.15 billion in loans for Bangladesh to bankroll seven development projects, Economic Relations Division (ERD) officials said.

The funds under the 41st Official Development Assistance (ODA) package would be utilised for constructing the country's two metro rail lines, upgrading transport system, improving food security while developing urban areas, a senior ERD official told the FE.

ERD secretary Fatima Yasmin and chief representative of Japan International Cooperation Agency Bangladesh Office Hayakawa Yuho signed the loan agreement.

In May last year, Japan provided the 40th ODA loan package worth $2.5 billion for financing five projects.

In a statement on Wednesday, Japan Embassy said this year's loan package comprises assistance of seven projects amounting to JPY338.247 billion (approximately $3.2 billion), the largest ever loan package since its inception in 1974.

Japan has emerged as Bangladesh's single largest bilateral donor since 2012, and its total commitment of loans in Yen reached $22 billion till date.

According to the ERD, Japan under the new package will provide JPY89.016 billion ($833 million) for the Jamuna Railway Bridge Construction Project (II), JPY80 billion ($748 million) for the Hazrat Shahjalal International Airport Expansion Project (II), and JPY1.906 billion ($18 million) for the Chattogram-Cox's Bazar Highway Improvement Project, JPY11.218 billion ($105 million) for the Food Value Chain Improvement Project, and JPY28.217 billion ($264 million) for the Urban Development and City Governance Project.

Besides, Tokyo will also provide JPY72.194 billion ($675.52 million) for the ongoing Dhaka Mass Rapid

Transit (Line-6) Development project (IV), and JPY55.696 billion ($521 million) for the Line 5 Northern route project, for which construction work has just started.

The ERD official said all the funds would be provided within 2020-21 provided the project work is completed in time.

The government had started the construction of the first metro rail line-6 from Uttara to Motijheel through the Japanese ODA loan a few years back.

Now Japan has come forward with its $521 million financial support for the country's second metro rail (line-5) from Aminbazar to Vatara via Mirpur 10.

The Dhaka Mass Transit Company Limited is building the mass transit railway lines inside the city aimed at easing the traffic congestion on the road.

The Bangladesh Railway has taken up the construction of Jamuna Railway Bridge parallel to the Bangabandhu Bridge, where Japan has confirmed the $833 million in loans.

The railway bridge is expected to be completed by 2024.

Bangladesh will have to repay the loans at 0.65 per cent interest rate in 30 years with a 10-year grace period.

However, the lender will charge 0.01 per cent interest rates for the partial loans to be utilised for consultancy services out the total package.

This month, Japan has for the first time confirmed $330 million in budgetary support from its Crisis Response Emergency Support Loan.

The largest bilateral donor will provide $1.0 billion budgetary support to Bangladesh government. The $330 million is the first tranche of the fiscal support.

The Asian donor has also provided approximately $13 million as the emergency support to tackle COVID-19 in Bangladesh through international organisations, as well as provided PPE to hospitals through the JICA.

In July, Japan offered a $10 million grant for Bangladesh to procure medical equipment, including CT scanners and X-ray machines.

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