Pledged Chinese Loan; Coming but at crawling pace

In 2017, with the view to alleviating the capital's absurd traffic congestion, the government took up the Dhaka-Ashulia Elevated Expressway project to implement largely with Chinese funding.

The $1.1 billion loan agreement for that project was signed on Tuesday -- four years after it got the nod of the Executive Committee of the National Economic Council.

The delay is not an anomaly but has become characteristic of the $20 billion soft loan pledged by Chinese President Xi Jinping on his maiden visit to Bangladesh in October 2016 to usher in a new era of bilateral ties between the two nations.

Some 27 projects, including mega-projects, were earmarked for implementation with the $20 billion pledged, but prising the funds out of China's hands has been a dawdling process, compelling the government to put the projects on hold.

So far, loan agreements have been signed for only eight projects, including the Padma rail link, Karnaphuli tunnel, installation of single-point mooring with a double pipeline, Info-Sarker 3.

Between June last year and October this year, no loan agreement was signed with China.

The impasse was broken with the signing of the loan deal for the Tk 16,901 crore-Dhaka-Ashulia Elevated Expressway project, which was originally scheduled for completion in June 2022.

With the signing of the loan agreement, construction work for the 24-kilometre expressway connecting Hazrat Shahjahal International Airport with Abdullahpur, Ashulia, Baipail and Dhaka Export Processing Zone on the Nabinagar-Chandra highway can finally begin.

Currently, negotiations are underway for signing the loan agreement for two other projects: one to set up a surface water treatment plant for the Rajshahi WASA and another on digital connectivity.

Both the projects were approved by the government in 2018 but are on hold for the uncertainty over Chinese funding.

Asked about the delay in signing the loan agreements with China, Finance Minister AHM Mustafa Kamal seemed at a loss.

"I have no idea. But this delay was not caused due to any of our internal problems," he told The Daily Star in the middle of the month.

Md Shahriar Kader Siddiky, joint secretary to the Asia Wing of the ERD, told The Daily last week that the delay in loan signing for the three projects cannot be blamed on the global coronavirus pandemic that began in January last year.

"Because, the agreements were due to be signed for a while now," he said, adding that the process for the other projects has gotten slower for the pandemic.

Since the in-person meetings are not taking place for the pandemic, all communication is now taking place through letters.

"It takes time to get things done through this form of correspondence. Earlier, it used to take less time to complete the procedures," Siddiky added.

China has been slow in completing the loan agreement procedures due to its engagement in vaccination and various other activities to combat the pandemic, which is said to have originated in its Hubei province, said a finance ministry official on condition of anonymity as he is not authorised to speak with media.

"Because of the pandemic, China's loan recovery process in different countries got hampered. So, China's foreign lending is no longer in high gear – they are being more cautious than usual," he added.

However, another finance ministry official said the funds pledged by Xi is coming through at the usual pace for China.

"It is actually not that slow if the historical trend and the other multilateral donors' commitment implementation are taken into consideration," he said.

Before fiscal 2009-10, China seldom provided loans to Bangladesh.

Until fiscal 2016-17, $1.5 billion worth of loan agreements were signed with China and about $1.3 billion disbursed, according to data from the Economic Relations Division.

Then in 2016, China came up with the big pledge of $20 billion.

Until June, $8.04 billion worth of loan agreements were signed with China, $6.66 billion of which were part of the $20 billion-package.

Of the loans agreements signed until June, $3.5 billion were disbursed -- and $2.26 billion were against the loan agreements signed for the $20 billion-package.

Chinese loans now amount to 7 percent of Bangladesh's total outstanding foreign loans. China is the third-highest bilateral lender for Bangladesh after Japan and Russia.