Asian Development Bank To Lend Bangladesh $744 Million For Economic Recovery

October 26, 2009 2:26 p.m. EST

Dhaka, Bangladesh (AHN) - The Asian Development Bank (ADB) will provide US$745 million credit to help the government overcome the impact of the global economic meltdown and minimizing the fiscal deficit of Bangladesh.

The Manila-based multilateral lender signed three aid pacts with the government for the total $745 million credit in the capital, Dhaka on Monday, an official announcement said.

Economic relations division (ERD) secretary M Musharraf Hossain Bhuiyan and country director of ADB's Bangladesh Resident Mission Paul J. Heytens signed the loan agreements in the capital, on the day, the announcement added.

Of the total aid, the ADB will provide $500 million from its "counter cyclical support facility" fund to shore up the shock sustained by the global economic dip, which forced down the gross domestic product growth (GDP) to 5.88 per cent from the initial target of 6.21 per cent last fiscal.

The $500 million credit will have to be repaid within five years with a three-year grace period. It carries an annual interest rate of LIBOR plus two percentage points, according to the announcement.

Besides, it would give another $244.85 million as budgetary support credit to minimize country's fiscal deficit projected at 5.0 percent of the total GDP in the current financial year 2009-10.

Out of $244.85 million funds, the ADB will disburse $100 million loan from its concessional Asian Development Fund (ADF), $44.85 million from the herd-term ADF window, and the rest $100 million from its hard-wing ordinary capital resources (OCR).

The concessional ADF loan has a maturity period of 24 year, including a grace period of eight years, with one percent interest rate during the grace period and 1.5 percent thereafter.

The hard-term ADF will carry the same maturity period but the interest rate will be 1.6 percent per annum for the life of the loan, the announcement added.