Biman gets $118m from BB in a special deal

Loss-making national flag carrier Biman took $118 million loans from the central bank's foreign currency reserve to procure two new aircraft.
A Bangladesh Bank official said they kept a deposit of $118 million with Sonali Exchange UK, the London-based subsidiary of Sonali Bank, at LIBOR+1 percent interest.
Sonali Exchange later gave the amount to Biman as loans at an interest of LIBOR+3.9 percent.
The BB made the special arrangement as the commercial banks were not willing to provide the loans.
Earlier, Biman took $114.5 million from the commercial banks but the amount was not paid back yet and had been rescheduled for five years.
The BB also wanted to let Sonali Bank make some business.
A finance ministry official said, though the International Monetary Fund had a reservation about giving loans to loss-making airlines, the credit was granted through a special arrangement.
The BB official said they kept the deposit with Sonali Exchange at an interest rate higher than they would get from elsewhere.
Biman will purchase two planes from US-based Boeing at $344 million. Biman gave Boeing $118 million as an advance payment in December.
About 75 percent of the payment will be financed by Export-Import Bank of the United States as credit.
The US bank will release the credit within 18 months and then Biman will repay the loans to Sonali Exchange, the BB official said.
Sonali Exchange will then refund the amount to the central bank, he said.
Earlier Biman purchased two planes from Boeing with a syndicated term loan $114.5 million arranged by Eastern Bank.
In 2008, Biman signed an agreement with Boeing for purchasing 10 planes. Of those, two were added to the Biman fleet last year.
Biman has been counting losses almost every year. The amount was Tk 632 crore last year.
The IMF earlier advised the government not to give any credit facility or guarantee to the loss-making Biman.
Under a $1-billion credit programme, the government also committed to the IMF that it will conduct a special audit into the flag carrier by June this year and prepare a five-year plan to make it a profit-making venture.