Bangladesh builds infrastructure fund with forex reserves

Bangladesh has formed a new fund with a portion of forex reserves to finance infrastructure projects.

Prime Minister Sheikh Hasina launched the fund, known as Bangladesh Infrastructure Development Fund, via video conferencing from the Ganabhaban on Monday.

The first project to be financed through BIDF is the dredging of a channel for the Payra port in southern Bangladesh. A three-way loan agreement was signed for the project in Dhaka.

Hasina said: “As a developing country, we will have to finance our own projects. We will develop our country. That is our goal. And a lot of work needs to be done to accomplish that.”

Hasina spoke about how the coronavirus claimed the lives of many and how that affected the economy.

Despite the effects of the pandemic, inward remittances surged, but import expenditure dropped. Foreign exchange reserves in Bangladesh reached a new high of $44 billion.

Bangladesh will now park part of the reserves in the infrastructure fund, setting aside money for import expenditures for six months.

“We were thinking about how we can spend the money from the reserves on development. Rather than begging for loans from others repeatedly, we can finance our infrastructural development ourselves. We could redirect our efforts to spend our own money rather than trying to borrow money from them.”

“This will benefit the country while boosting our confidence, deliver us self-esteem, and we will be able to show the world that we are capable too.”

Drawing attention to funding the Payra port project, she said, “We also have to build the deep-sea port. We have already reopened the Mongla port, which was suspended during the BNP’s rule. Besides, another port in Matarbari is complete.”

Hasina mentioned Bangladesh’s convenient geographical location allowed India, Nepal and Bhutan to use its ports and that many other countries would be given the opportunity to do the same in future.

The Finance Division, Payra Port authorities and Sonali Bank Ltd signed an agreement over financing the Payra port project.

$2 BILLION ANNUAL LENDING PLAN

A finance ministry spokesman said Payra Port will get Tk 54.17 billion from the BIDF through Sonali Bank over a period of 10 years.

Hasina said the fund will be used for investment in ports and power sector initially with an annual investment target of $2 billion, according to a statement from the ministry.

She said it was necessary for Bangladesh to build a third port because the port in Chattogram has reached the limit of its capacity while pressure is mounting due to a rise in foreign trade.

She hoped it would be possible to improve the navigability of the Rabnabad Channel by increasing its depth to 10.5 metres through capital dredging.

“It will add a new dimension to Bangladesh’s foreign trade as a huge number of foreign ships will arrive at the port,” the prime minister said.

The government assumes the demand for container cargo transportation will double by 2050, according to her.

Once Payra Port’s capacity increases through the capital and maintenance dredging, the region will experience a boost in industrialisation, infrastructure development and trade, Hasina hopes.

These will create huge job opportunities for the poor in the southern parts of Bangladesh and overall the entire country will be benefited from the port’s development, she added.