Published:  04:12 AM, 03 December 2019

Chinese loans: Hope or bluff?

Chinese loans: Hope or bluff? Chinese loans have put different countries in trouble like Pakistan, Sri Lanka, South Sudan, Maldives, Zimbabwe, Nigeria, Kenya etc. -Economist

Agreements were signed between Bangladesh and China in October 2016 that Chinese authorities would provide loans of 2 thousand 53 crore dollars to Bangladesh for different infrastructural projects.

The accords were signed during Chinese President Xi Jinping's visit to Bangladesh at that time. More than three years have elapsed but China has so far disbursed only 5% of the loans. As a result the development programs supposed to be implemented with Chinese financial support have become totally uncertain.

27 projects were supposed to be accomplished with Chinese loans in Bangladesh by 2020. According to updated information from Economic Relations Division (ERD), loan agreements over only six of these projects have been so far signed under which China has released 106 crore 77 lakh dollars only.

The government has meanwhile shifted the project of elevating Dhaka-Sylhet highway to four lanes to Asian Development Bank (ADB).The Joint Working Group (JWG) consisting of Bangladeshi and Chinese officials are scheduled to have a meeting shortly to sort out these problems.Under these circumstances questions have come up whether Chinese loans are hope or just a bluff.

The Padma Bridge rail link, Karnaphuli river tunnel, phase III of the Info-Sarkar project, installation of a single-point mooring with double pipeline in Maheshkhali and modernization of telecommunication network for digital connectivity-these five projects are at the implementation stage out of 27 projects that China agreed to finance.

The loan agreements for all five projects involving $3.9 billion were signed between October 2016 and April 2018, but so far there has been very scanty disbursement of funds.

The signing of the loan agreement for the $689.35 million-Karnaphuli river tunnel project was held in October 2016 and so far only $194.81 million has been released.Besides in November 2017, the loan agreement for the $550.67 million-single point mooring project was signed and only $82.73 million has been disbursed so far.

Only $44.94 million was released for the $224.96 million project on modernization of telecommunication network for digital connectivity. The loan agreement on it was signed in April 2018.In the same month, a loan agreement for the $2.67 billion-Padma Bridge rail project was inked while so far only $533.58 million has been disbursed.

It may be added that the China Pakistan Economic Corridor (CPEC) and China's One Belt One Road (OBOR) projects have run into massive hurdles in Pakistan. Karachi Stock Exchange was devastated after getting affiliated with Chinese consortium. Chinese loans have jeopardized the economy of Pakistan, Sri Lanka, South Sudan, Maldives, Zimbabwe, Nigeria and some other countries.

Sri Lanka has in recent times handed down its Hambantota Port to China being unable to abide by the stringent terms and conditions of Chinese loans. Kenya is on the brink of giving away its Mombasa port to the Chinese authorities for reasons of inclement Chinese loans, reports by different media agencies have exposed. 

Immediate past Malaysian Prime Minister Najib Razak has been charged with big corruption cases involving Chinese financial deals. Mahathir Mohamad has therefore halted almost all the Chinese projects in Malaysia.

Former adviser to caretaker government Dr. Wahid Uddin Mahmud told The Asian Age, "The expenditure for all the projects should be properly evaluated to avoid graft and anomalies. Projects which take long to be implemented become too expensive at the end of the day."

Bangladesh Bank's former governor Dr. Salehuddin Ahmed said to The Asian Age, "The authorities concerned should exercise serious thoughts on alternative funds in case the aspects of Chinese loans for infrastructural projects appear to be irrational."

Bangladesh Bank's former deputy governor Dr. Khondaker Ibrahim Khaled told The Asian Age, "The government should examine the pros and cons of Chinese loans very carefully to save Bangladesh's economy from undesirable consequences."

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