Govt to borrow $1.06bn under hard-term loans

Published : Thursday, 25 September, 2025 at 6:18 PM Count : 31

The government has decided to borrow nearly $1.06 billion in hard-term foreign loans to implement seven major development projects.

The decision came at a meeting of the Economic Relations Division’s (ERD) Foreign Aid Exploration Committee held on Wednesday at the NEC Conference Room in Sher-e-Bangla Nagar, chaired by Economic Adviser Dr. Salehuddin Ahmed.

Officials said that the loans, unlike concessional financing, carry higher market-based interest rates along with shorter repayment and grace periods. With Bangladesh’s transition to middle-income status, concessional loans from traditional sources such as the World Bank and ADB are shrinking, forcing the country to increasingly rely on non-concessional borrowing.

The approved projects include expansion of Dhaka’s water supply system, construction of climate-resilient bridges in Mymensingh, upgradation of northern power supply, conversion of the Chattogram–Dohazari rail line to dual-gauge, the Dhaka Environmentally Sustainable Water Supply Project, Khulna Water Supply (Phase II), and a power distribution project in the northern region (NESCO area).

Among the largest schemes is the Syedabad Water Treatment Plant (Phase III), with a cost of over Tk 16,000 crore. The European Investment Bank (EIB) will provide Tk 11,448 crore ($900 million) entirely under hard-term conditions. EIB is also financing the Dhaka Environmentally Sustainable Water Supply Project, worth Tk 10,973 crore, with Tk 6,740 crore ($900 million) in similar terms.

Other approved financing includes Tk 2,850 crore from the Islamic Development Bank (IsDB) for five climate-resilient bridges in Mymensingh, Tk 7,000 crore from ADB for the Chattogram–Dohazari rail upgrade, Tk 1,821 crore from ADB for Khulna Water Supply (Phase II), and Tk 965 crore from ADB for the northern power distribution project.

ERD sources said, the government is also examining options to secure future loans on softer terms, though such opportunities are becoming increasingly limited.

FP/MI