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AIIB urged to relax lending terms, rate

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Bangladesh has requested the Asian Infrastructure Investment Bank (AIIB) to relax its lending terms and conditions amid the global economic situation, officials said on Wednesday.

Visiting AIIB Vice President for Investment Operations Dr. Urjit R Patel has been communicated with the country's concern as the Beijing-based multilateral bank's interest rate is considered to be higher in the present day global situation.

AIIB provides loans to its members based on secured overnight financing rate (SOFR) and charges interest by adding some spread.

It usually charges SOFR plus 1.25-1.40 per cent spread to Bangladesh. On Wednesday, the 6-month SOFR was 4.7808 per cent. The average maturity of its loan is 20 years with a 5-year grace period.

Dr Patel arrived in Dhaka Tuesday on a three-day visit to oversee the bank's operation in Bangladesh and explore future cooperation here. He is scheduled to leave Bangladesh today (Thursday).

At a meeting on Wednesday, State Minister for Planning Professor Shamsul Alam requested the AIIB VP to expedite the bank's support, especially budget support and programme loans, as Bangladesh is one of its important members.

"I've briefed Mr Patel about Bangladesh's current economic indicators which are mostly good. I've told him that Bangladesh will not face any recession due to its better economic health at this moment," Prof Alam told the FE.

Earlier on Tuesday, Dr Patel met Finance Minister AHM Mustafa Kamal at his office in Dhaka. Mr Kamal urged the AIIB VP to relax the loan conditions and waive commitment fee like the World Bank for their portfolio in Bangladesh.

At the meeting with Prof Shamsul Alam, Dr Patel said the AIIB is ready to expedite financial support to Bangladesh as the country's economy is doing well in the South Asian region.

He said the AIIB would provide US$4.5 billion in assistance to Bangladesh in the next couple of years.

He also assured of providing more budgetary support to Bangladesh if the country needs it in the coming days, the state minister told the FE.

Mr Patel also told the minister to expedite the development project processing, implementation and cut the time and cost overrun.

Besides, he also suggested reducing the land acquisition time as the project implementing agencies waste a remarkable time for the work.

Dr Patel also met State Minister for Power, Energy and Mineral Resources Nasrul Hamid and Economic Relations Division (ERD) Secretary Sharifa Khan on Wednesday.

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