Bangladesh Pays Foreign Bill in Taka for the First Time
At a cost of Tk 17,653 crore, or about $1.2 billion, the project is building a 24-kilometer elevated highway that goes from Dhaka to Ashulia.
China is giving a loan for 85% of the cost at 2% interest and 20 years to pay it back, with a grace time of five years. The Bangladesh government is paying for the final 15%.
The Export-Import Bank of China is giving the Chinese contractor, China National Machinery Import & Export Corporation, who is running the project, the loan part in US dollars. The bank will be paid back by the government of Bangladesh.
As for the 15% of the Bangladesh government, Shahabuddin Khan, the project head, said, “We convinced them (the contractor) to accept the bill in taka because they will be spending money in Bangladesh.”
“Given the current situation, they agreed to our proposal,” he said.
He said that more than 250 Chinese people, including experts and staff, and 1,000 Bangladeshis are now working on the project.
To fix an imbalance between demand and supply on the foreign exchange market, the Bangladesh Bank has sold foreign currencies and let the taka lose value.
The country’s foreign exchange reserves fell from $42.20 billion on May 31 of last year to $29.92 billion on May 31 this year, according to data from the central bank. This was because the country spent more on imports than it made from exports and remittances altogether.
In November of last year, Prime Minister Sheikh Hasina started building, and the first payment of Tk 1,339 crore, or $130 million, was made in October. The Bangladesh government’s share of the total was Tk 34 crore.
The Bangladeshi government will pay Tk 90 crore for the subsequent payment of Tk 600 crore, or $58.25 million, which will be made in June.
Khan said, “This will keep happening until the situation with the foreign currency reserves gets better.”
Once completed, the expressway will connect the Dhaka Export Processing Zone to Abdullahpur, Ashulia, Baipail, and the Hazrat Shahjalal International Airport through the Nabinagar-Chandra route. This will make it simple to enter and exit the city.
It will link to Kutubkhali, which is near Dhaka’s Jatrabari Police Station.
The expressway will benefit more than four crore people from 30 districts, including the northern districts, because it will make transferring people and commodities simpler and quicker.
The paper for the expressway project says that the country’s GDP will go up by 0.217%.
More than 5% of the job has been done, and by the end of June, that number will be up to 8%.
“We plan to finish 30% of the whole project by the end of the next fiscal year,” Khan said.
Md Masudul Haque, joint secretary of the Economic Relations Division’s Foreign Aid Budget and Accounts wing, stated that this is the first bill payment made in the local currency for a project that was mostly paid for by foreign loans.
“It would be beneficial for the nation and save some foreign currency if the same could be done for all of these kinds of projects.”
Prof. Selim Raihan, who runs the South Asian Network on Economic Modeling, thinks that this was made possible by good talks with the contractor.
“It is a good idea, and it will help make the forex reserve less stressed.”
“This project will also help money move around, and all of the local businesses will gain from it. If this deal can be made for projects paid for with foreign loans, it will be good for the economy in the long run.
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