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Sunday, February 3, 2013
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Do the math, then decide

Experts ask govt about alternative funding

The government should carry out a detailed financial analysis into the Padma bridge project before it opts for alternative funding merely on political consideration, experts and economists said yesterday.

They said the government should consider opening dialogue with development partners, as they offer the cheapest loans on flexible conditions compared to commercial credits.

The observations came a day after the World Bank, a lead financier of the $ 2.9-billion project, on Friday revealed that the government wrote to it to say it was no longer pursuing the $ 1.2 billion funding from the Washington-based lender.

Mirza Azizul Islam, a former caretaker government adviser, said the impact of the decision would be unfavourable for the country.

He said it would not be possible to generate revenues for mobilising about $ 2 billion.

"We may have to go for drastic expenditure cut elsewhere under the Annual Development Programme, which means, many of the approved projects will be terminated.”

The government may go for other bilateral parties, which is definitely going to be a lot more expensive, in terms of interest rates and maturity period, said Islam, adding,

"It will not be economically rational if we jump into it without a detailed analysis."

According to Islam, the foreign exchange component in the project is very high. "So, if we take the foreign exchange liability, it will have a pressure on our exchange rate."

The bridge is an import-intensive project with about 75 percent of the total project cost going in imports of goods and services. It will require about $ 2.2 billion worth of imports.

Islam said the government can start the implementation of the project anyway. "But it has to keep the conclusion in mind."

Islam said he did not see the option for soft loans unless the government withdrew its letter and stated that it was willing to meet all the conditions.

"In such case, there will be a loss of face to a large extent."

Salehuddin Ahmed, a former central bank governor, said: "It is possible to construct the bridge with domestic resources, but it will not be logical."

The economist observed that the government should try to mobilise soft loans and open dialogues with development partners on getting cheap loans.

According to him the government's decision to pull out of the discussion will discourage other donors.

It is not necessary that this government laid the foundation stone for the project, said Salehuddin, adding, “It should first try to sort out the financial issues.”

Executive Director of Transparency International, Bangladesh Iftekharuzzaman, said the Padma bridge had become uncertain. What the government was saying was only the initial process. It was political statement.

"By shutting the door on discussion with the World Bank, the government has lost an opportunity to demonstrate committed towards its election pledge of fighting graft.

"It will also raise question about the government's priority as to whether it has sacrificed the country and the people's interest in protecting one or two persons," he told The Daily Star.

"The government's failure to bring all responsible people to book will encourage more high-level corruption."

Ahsan H Mansur, executive director of Policy Research Institute, a respected think-tank, said he saw no possibility of starting the physical work by September this year.

He said the government should initiate economic diplomacy and try hard to mobilise funds from other development partners as much as possible.

For example, the World Bank's IDA loan carries 0.75 percent per annum service charges, a decade-long grace period, and a repayment period of 40 years.

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The people of Bangladesh does not want a political bridge and pay a leg and arms for it, especially when it did not have to do that with WB deal.

: Roni Rahman

Civil society and all nations loving Bangalee should unite against this corrupt AL regime and stop them from causing more damage to the economy and future of Bangladesh. In the name of election promise, the AL will now make a bridge which quality and service will be heavily compromised besides getting a loan with very high interest. The corrupt regime will get more chance of corruption if the project is approved in their present tenure. Let the people of Bangladesh decide in next election if they should trust this corrupt party for such a vital mega project. Only if AL wins the confidence of majority it should be allowed to build the bridge.

: Barkat

Comments

  • Misbah Uddin Sumon
    Sunday, February 3, 2013 05:51 AM GMT+06:00 (77 weeks ago)

    After comprehensive detailed analysis of the total project costs, government has to start the Padma Bridge project to complete it, not to show the foundation-stone only. Because we know that 75 percent of total project costs will be used to import materials. To import goods and services Bangladesh has to pay in dollar and our reserved dollar is not so high. According to Bangladesh Bank, Bangladesh has $12.70 billion on December 23, 2012. By using our reserved dollar is not possible to complete this gigantic project. Otherwise, if we use local goods and services then the Padma Bridge will not long last. So, government has to discuss with different donor who will give soft loan in this project.

  • Selma
    Sunday, February 3, 2013 05:52 AM GMT+06:00 (77 weeks ago)

    When WB is out of the picture, so all decent lenders would run for the exit. Awami League is a loser, so stop listening to them, this bridge will not be built whilst they are in power!

  • Alamgir
    Sunday, February 3, 2013 06:16 AM GMT+06:00 (77 weeks ago)

    It is a far cry that the govt will do its maths and then decide on alternative funding. The burden will be on the people of Bangladesh so the people in the govt couldn't careless. That is how govt operate here in Bangladesh.

  • M.Ashraf
    Sunday, February 3, 2013 09:47 AM GMT+06:00 (77 weeks ago)

    If the govt. was in a position to do math, we would not be in the position that we are in right now. A nation born out of the sacrifice of thousands is being sold for the benefit of a few thieves. Where is the math in that? All said and done it comes to responsibility and accountability, the two basic tasks the leaders are unwilling to undertake. They want to live like mosquitoes, just suck the blood of others without having to do anything. Someone better start swatting if this country is to survive.

  • mohammad shaheed
    Sunday, February 3, 2013 10:07 AM GMT+06:00 (77 weeks ago)

    I read the report. Are we going to build the bridge in one year? Mr Islam told that we need to mobilize $2 billions. Is that right? Please don't make us fool. We need do mobilize that amount in 4-5 years. And the rate of interest is actually 20.75%, not only 0.75%.

  • mohammad shaheed
    Sunday, February 3, 2013 10:13 AM GMT+06:00 (77 weeks ago)

    WB is distributing advice about honesty. It is very funny. Because a numerable countries refused to deal with the bank due to their political agendas. Those who can not think without World Bank about their life, they should not talk about much.

  • nds
    Sunday, February 3, 2013 11:49 AM GMT+06:00 (77 weeks ago)

    It appears from the views of the experts summarised here that WB loan for construction of the bridge is the best option. But since the best option is not available for whatever reasons it might be we have no alternative to go for the second best available option. It is desirable that instead of accusing the government the experts should suggest a concrete proposal about what could be the second best option both on economic and technical point of view. For the government failure to avail of the best option let it be left to the people of the country to decide how they like to penalize them for it in the next election. By any means we don't like to sacrifice the bridge.


 

 


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