Bangladesh has so far failed to reap any benefits of the BRICS-led New Development Bank (NDB) despite its entry into the new multilateral lender more than three years ago in 2021.
The NDB has still to approve any loan for Bangladesh other than that for five founding members-Brazil, Russia, India, China and South Africa (BRICS), insiders said on Saturday.
In September 2021, the board of the Shanghai-based lender welcomed Bangladesh as its sixth member.
Insiders said Bangladesh has taken a cautious approach to acquire loans from the NDB, formerly BRICS Development Bank, as those are costly compared to other typical lenders of the country.
Following its accession, Bangladesh sought loans from the NDB to finance building some infrastructure and facilitate socio-economic development.
In the meantime, a high-level delegation from the NDB also visited Bangladesh in January 2024. Dhaka requested it to expedite the loan approval process.
But the lender has taken a delaying tactic to approve the loan for Bangladesh, said government officials involved in communications with the NDB.
However, the NDB's Corporate Communications Division told the FE that they are on track to help Bangladesh.
"NDB is fully committed to working closely with Bangladesh, supporting infrastructure and sustainable development projects in alignment with its national development objectives and commitments under SDGs," said the NDB through an email communication last Friday.
During last year's meeting with NDB vice-president and COO Vladimir Kazbekov, the lender informed Dhaka that it was looking to lend money equivalent to $1.0 billion per year for large-scale projects in Bangladesh and about $3.5-$5.0 billion during the 2022-2026 work plan period.
Earlier, Bangladesh sought financial assistance for different projects, including five bridges, at an estimated cost of $8.87 billion.
The NDB has so far approved concept papers of four projects-three for the public sector and one for a private commercial bank-at least a year ago.
It endorsed a $320-million loan for a Dhaka Wasa project in August 2023, $100 million for a DNCC project in December 2023 and $442 million for Titas Gas Transmission and Distribution Company in February 2024.
Besides, the NDB approved another $25-million loan for the private commercial bank-City Bank PLC-in April 2024.
"We're waiting for approval of at least two quick loans from the NDB board. We're also ready to sign the loan deals," said a senior official of the Economic Relations Division (ERD).
A DWASA official said they were waiting for the approval of the NDB loan with an eye to improving Dhaka's water supply system with the proposed project.
Following its birth, the NDB agreed to finance infrastructure projects in member countries worth a cumulatively loan of $35 billion for about 100 projects, NDB president Dilma Rousseff told a programme last year.
A couple of finance ministry officials said the government was going slowly with the proposed NDB loans as those are comparatively costly.
The FE analysis has found that the NDB's maturity is a maximum of 19 years along with five years' grace period.
The lender charges six-month LIBOR/SOFR plus spread ranging from 1.03 per cent to 1.35 per cent for borrowing its loans.
Besides, it charges 0.25-per cent front-end fee for approved loans while 0.25-per cent commitment fee for an undisbursed amount of the credit after approval.
The Bangladesh government also borrows costly loans from the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB), which covers a market-based (SOFR) one.
According to the Federal Reserve Bank of New Your, the SOFR rate was 4.92974 per cent on Saturday.
In a query, the NDB replied that it was mobilising resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries.
In line with NDB's commitment to transparency and information disclosure, the bank is publishing information about proposed projects on its official website, added the Corporate Communications Division of the NDB.
"For example, NDB is considering advancing a loan of USD 25 million to City Bank Plc, one of the largest commercial banks in Bangladesh. The funds will be on-lent to private sector for investments in sustainable infrastructure projects in clean energy and energy efficiency, transport and digital infrastructure."
"The project is at an advanced stage of preparation, with approval targeted within the first half of 2025," it said.
When Bangladesh formally acceded to NDB, it actually joined with a larger subscription of $942 million (1.84 per cent of the total) and received 1.88 per cent of exercisable votes on the two boards of the bank.
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