WB, ADB extend $170m for railway sector development

from The Financial Express

The donors' community has come forward at last to open their aid basket during the present interim government's tenure with signing of a loan agreement Thursday.

After a respite of a couple of months, the World Bank (WB) and the Asian Development Bank (ADB), offering hopes for more new deals from now on, signed a $170 million loan agreement Thursday with the Economic Relations Division (ERD), the government's negotiating agency on foreign aid.

Of the total loan, the WB would provide $40 million and the ADB $130 million to help develop Bangladesh's ailing railway sector.

ERD officials said, due to political turmoil in the recent past the donors' community almost stopped any further aid deal with the interim government and closely watched the political developments in the country. No big loan deals were signed during the period, they added.

However, as the situation returned to normal after takeover by Dr Fakhruddin Ahmed as the Chief Adviser to the Caretaker Government, they have resumed their financial supports to several new projects, the ERD officials opined.

At a ceremony Thursday at the NEC conference room, ERD Secretary M Aminul Islam Bhuiyan signed the $170 million loan agreement on behalf of the Bangladesh government while WB's new Country Director Xian Zhu and ADB's Country Director Hua Du signed it on behalf of their respective agencies.

After the deal signing ceremony, Xian Zhu told reporters that the huge investment in the railway sector development in Bangladesh would usher in a new era of efficient transportation system.

The WB will continue its support to Bangladesh for the purposes of development as well as poverty alleviation, he stated.

When asked about ADB's continuous support for Bangladesh's development, Hua Du said the Manila-based funding agency was ready to extend support to the government on priority projects.

ERD secretary M Aminul Islam Bhuiyan said the development partners have at last come forward to support the government for different projects to continue their financial assistance to the country.

"With this loan deal, I think all the bilateral and multilateral donors will extend their development support for Bangladesh in coming days," he opined.

Under a joint investment programme for BR development, the ADB will provide a total of $430 million under a multi-tranche financing facility, the WB $240 million and the Japan Bank for International Cooperation (JBIC) $100 million, ERD sources said.

Of the first tranche of $130 million of ADB, $100 million would be spent for doubling the railway line from Tongi to Bhairab Bazar, procurement of railway locomotives, wagons and coaches and for consultancy services and the remaining $30 million for BR reform and capacity building in 2007. Besides, the Manila-based development partner will provide the remaining $300 million out of the $430 million loan in three tranches during the financial years of 2008 to 2011, the ERD sources said.

According to the sources, WB's $40 million policy loan will be spent for institutional and governance improvement in BR. Its support will be followed by another $260 million loan for the railway reform and development programmes in 2009.