Bangladesh “never will” ask China for more loans as it looks for ways to finance its future development, says State Minister for Foreign Affairs Mohammed Shahriar Alam.
Speaking to the South China Morning Post ahead of the Belt and Road Forum in Beijing on Thursday, he said any amount of debt can be “dangerous” for countries not achieving high economic growth, adding that “Bangladesh has gained the economic power” to service its own loans linked to Beijing’s “Belt and Road Initiative (BRI)”.
During Chinese President Xi Jinping’s visit to Bangladesh in 2016, the two governments signed 27 agreements for investments and loans, amounting to a reported US$24 billion.
Concerns were raised at the time that this could be creating a debt trap for the South Asian country – criticism that Chen Wei, deputy chief of mission at China’s embassy in, has dismissed as a “total misunderstanding” and “smears” that are “totally groundless”, says the report.
When asked if planned to seek more loans from Beijing during the upcoming Belt and Road Forum, Alam told the newspaper Bangladesh “never had this intention and never will ask for more loans”.
“We have signed many projects with multiple companies and countries,” he was quoted saying in the report. “It’s a competitive bidding process. We are awarding contracts to companies who can set up [in Bangladesh] and bring loans on their own. That suits us best.”
Other financing models such as public-private partnerships were also being investigated, he said.
Under this model, a foreign company could build a power plant, for example, and sell the electricity produced to recoup its costs. Then, after a specified time, ownership of the plant would revert to the national government.
“We are devising new financial mechanisms. That’s how we want to finance our future,” Alam said.
Dhaka is expecting GDP growth of 8.13 percent this financial year, up from 7.86 per cent the previous year, which would make it the fastest growing economy in Asia.
Citing an official at the Chinese embassy in Dhaka, the report said that the two countries will “soon” finalise details on tariff-free access for 97 percent of the products Bangladesh exports to China.
The official said Beijing and Dhaka will sign an unidentified number of commercial contracts during the Belt and Road Forum, but no government-to-government loans agreements will be signed.