Bangladesh is eager to sign a €50 million credit agreement with France to fund its garment factory remediation, officials have said.
"We expect to sign a loan agreement worth €50 million with France for upgradation of safety standards of the country's export-oriented ready-made garment (RMG) sector by September next," a senior official of Economic Relations Division (ERD) told the FE.
"The French Development Agency (Agence Française de Développement, AFD) board authorised a loan of €50 million for the project in December 2015. The French agency has managed to mobilise other development partners."
However, the board of European Union (EU) committed a grant of €6.3 million in November 2015, supplemented by a grant of €4.0 million sanctioned by the German government in March 2016 (implemented by KfW).
"The programme will also benefit from a complementary GIZ initiative amounting to €3.0 million (in-kind TA)," according to the AFD data.
The French agency has already sent a draft of 'grant financing agreement' on EU grant fund, the official said.
The AFD fielded a mission in Dhaka from June 11 to June 15, 2017 to review the progress in its credit facility programme undertaken for RMG sector.
Negotiations on the loan agreement had been completed and credit facility agreement had received approval from the ministry of law.
During the last annual consultation meeting held in May 2017, the Bangladesh government and the AFD agreed that all financial agreements should be signed by September 2017, an official concerned said.
The AFD in a letter recently requested the government to fulfil requirements of the financial offer within the stipulated time, he added.
"It is now essential that the project starts as soon as possible in order to meet financial needs of RMG sector. RMG factories are currently facing an important time-constraint since they are expected to complete at the earliest the corrective action plans (CAPs) prepared by the Accord, the Alliance and the National Tripartite Plan of Action (NTPA)," an earlier AFD letter said.
The AFD aims to assist and support Bangladeshi RMG factories to upgrade their safety standards (on a priority basis) as well as their social and environmental performances, sources concerned said.
The loan agreement will be signed between ERD and AFD.