BD Govt Takes $1.06B in Costly Foreign Loans

The government is set to borrow nearly $1.06 billion in non-concessional (high-interest) foreign loans to implement seven major development projects, as decided in a meeting of the Foreign Aid Exploration Committee under the Economic Relations Division (ERD) on Wednesday.

The meeting, held at the NEC Conference Room in Sher-e-Bangla Nagar and chaired by economic advisor Dr. Salehuddin Ahmed, was attended by ERD Secretary Md. Shahriar Kader Siddiky and other senior officials.

Out of 36 loan-dependent project proposals presented by various ministries and agencies, only seven received preliminary approval for loans under tougher conditions.

Non-concessional loans typically come with market-based interest rates, shorter repayment periods, and limited grace periods compared to concessional (soft) loans. Such loans are often the only option for critical projects like energy, power infrastructure, and key imports, where concessional financing is unavailable.

In recent years, a growing portion of Bangladesh’s foreign debt has come from non-concessional sources due to declining soft loans from institutions like the World Bank and the Asian Development Bank (ADB).

Approved Projects and Funding Sources

Among the approved projects:

• Mymensingh Region Bridge Project: Five climate-resilient bridges will be constructed at a total cost of Tk 3,745 crore. The Islamic Development Bank (IsDB) will finance Tk 2,850 crore.
• Saidabad Water Treatment Plant (Phase-3): One of Dhaka WASA’s two major projects, this one will cost over Tk 16,000 crore, with €800 million (Tk 11,448 crore) in loans from the European Investment Bank (EIB), entirely under non-concessional terms.
• Dhaka Environmentally Sustainable Water Supply Project: The second WASA project will cost Tk 10,973 crore, with €80 million (approximately $90 million or Tk 674 crore) in non-concessional loans from EIB.
• Chattogram-Dohazari Dual Gauge Rail Conversion: Estimated at Tk 10,797 crore, ADB will provide Tk 7,000 crore in loans for this transport infrastructure upgrade.
• Khulna Water Supply (Phase 2): ADB will provide Tk 1,821 crore for this Tk 2,598 crore project.
• Northern Electricity Distribution Project (NESCO): Tk 965 crore of the Tk 1,184 crore project will be financed by ADB.

These seven projects reflect the government’s increasing reliance on high-interest foreign loans amid tightening global financing conditions and declining concessional aid.