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Foreign exchange reserves were not affected by the Padma Bridge

Agrani Bank meets $1.48 billion foreign exchange requirement so far, did not borrow from BB

Traveling on a visit at the invitation of the Prime Minister’s Office, reporters soak up the sights at one end of Padma Bridge a few days ago. Photo: Anisur Rahman

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Traveling on a visit at the invitation of the Prime Minister’s Office, reporters soak up the sights at one end of Padma Bridge a few days ago. Photo: Anisur Rahman

In 2012, when the government decided to build the Padma Bridge using its own resources, many economists feared that Bangladesh’s foreign exchange reserves would suffer.

A decade later, things are completely different.

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Prime Minister Sheikh Hasina inaugurated the much-talked-about bridge yesterday and the country’s foreign exchange reserves quadrupled to $41 billion from a decade earlier.

Since 2013, a state lender has met the project’s foreign exchange needs from its own revenues. He did not need to buy a single foreign currency from Bangladesh Bank reserves to finance one of the largest infrastructure projects in the country’s history.

The state lender, Agrani Bank Ltd, is the sole provider of foreign exchange for the project and made payments of $1.48 billion to international contractors and consultancy firms in May this year.

“We were able to make the payment in foreign currency from our own earnings, without buying a penny of the Bangladesh Bank’s reserves,” said Zaid Bakht, chairman of Agrani Bank.

“We even sold the greenback at three cents below market rates. This reduced Agrani Bank’s profits but we could help build the bridge by sacrificing profits,” he told the Daily Star. .

Bakht, a former research director at the Bangladesh Institute of Development Studies, has served as the bank’s chairman since November 2014. Construction of the Padma Bridge also began the same month.

The cost of the 6.15 km bridge is Tk 30,193 crore or $3.56 billion. The government has spent Taka 27,592 crore from the trunk so far, which was 91% of the cost.

Under the agreement, Agrani Bank is to make payments of $2.4 billion in foreign currency, according to Bangladesh Bridges Division, the project’s implementing agency.

This means the bank must settle payments worth $920 million in the coming days, and Bakht is confident the public lender would be able to make the payments out of its own pocket on time.

“Payments are made in phases,” says the economist.

The Padma Bridge project was implemented with the country’s own funds after the World Bank and other international lenders canceled funding in 2011 over allegations of corruption, which the government has denied.

The allegations against the government and those responsible for the project were later dismissed by the Bangladesh Anti-Corruption Commission and a court in Dhaka. A Canadian court also found no evidence of a bribery conspiracy involving the project.

But supported by the increase in foreign exchange reserves and export earnings, the government decided to continue the project on its own resources. It was at this time that the issue of payments to international contractors and foreign exchange consulting firms came to the fore.

In 2012, the bank notified the government of its ability to provide foreign currency. The Bridges division opened an account at the lender’s Gulshan branch on August 27 of the same year.

A meeting chaired by the Governor of Bangladesh Bank was held on February 3, 2014 to decide how Agrani Bank will supply the foreign currency.

It was agreed at the meeting that if there was still a shortfall, the BB would sell foreign currency to Agrani Bank.

In order to reassure foreign entrepreneurs and consulting firms, Agrani Bank issued a comfort letter three days later.

The bank has emphasized exports and remittances, the two main sources of foreign exchange for Bangladesh, to meet the need for foreign exchange.

“As a result, we did not encounter any obstacles in the supply of foreign currency,” Bakht said.

He says the bridge will be a game changer for the South West region in particular and Bangladesh in general.

“The bridge will not be used to cross the river alone. There will also be economic benefits.”

The government has already drawn up a comprehensive development plan for industrialization in the southwestern region where work to create 13 economic zones has already started and the process of building some power plants is underway.

“The bridge will bring Mongla and Payra ports closer to Dhaka. Apart from that, the possibility of regional connectivity is much better,” Bakht said.

As a Padma Bridge lender from its own vault, Agrani Bank’s level of confidence has been boosted, Bakht said.

“Going forward, Agrani Bank will play a key role in the development of major infrastructure in Bangladesh.”


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