• Thursday, Dec 12, 2019
  • Last Update : 08:40 am

Govt curtails projects' grant threshold

  • Published at 12:01 am October 3rd, 2019
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The cabinet committee on economic affairs (CCEA) approved a proposal to this effect on Wednesday

The government has curtailed the grant threshold in foreign financing development projects from 35% to 25% to ensure smooth inflow of disbursement against external borrowing.

The cabinet committee on economic affairs (CCEA) approved a proposal to this effect on Wednesday.

The Economic Relations Division (ERD) sent the proposal as per the decision of the standing committee on non-concessional loan.

The Finance Minister AHM Mustafa Kamal said the grant element threshold in projects submitted for external borrowing were curtailed to avoid slow disbursement.

He said the country was going ahead towards achieving the status of a middle income nation and it would need to pay more against foreign debt in the coming days.

“If we don’t do it, we may face a sluggish disbursement against external borrowing. So, the initiative has been taken to ensure smooth disbursement,” said Kamal while briefing reporters on the CCEA meeting outcome at the secretariat.

According to World Bank (WB), the degree of concessionality of a loan is measured by its “grant element”.

The WB says the grant element is defined as the difference between the loan’s nominal value (face value) and the sum of the discounted future debt-service payments to be made by the borrower (present value), expressed as a percentage of the loan’s face value.

According to ERD data, Bangladesh received $79.25 billion in foreign financing since after independence up to June 2018. Of the amount, loans were $51.83 billion and grants $ 27.42 billion.

Finance minister said Bangladesh was good in external debt management.