$1 bn loan from India suicidal: Khaleda Zia

Bangladesh inked USD 1 billion deal with India`s Exim Bank last Saturday.

Updated: Aug 09, 2010, 13:43 PM IST

Dhaka: Bangladesh`s opposition leader Khaleda Zia has termed as "suicidal" the USD 1 billion deal the government signed with India`s Exim Bank last Saturday.

The Sheikh Hasina government has rejected the charge.

"There was no need to borrow the amount from India now. People will have to shoulder the burden," Zia was quoted as saying by New Age newspaper on Monday.

Zia, who is the Bangladesh Nationalist Party`s chairperson, called the deal suicidal.

BNP has alleged that the interest on the loan Bangladesh would have to pay would be "seven times higher than the international rates".

The interest rate is 1.75 percent for a 20-year loan that carries a five-year grace period for repayment.

Rejecting the charge, Foreign Minister Dipu Moni said: "When they (BNP) are in power they follow a policy of pleasing India, and when they are in opposition they are vocal against India."

"The opposition is not finding any issue for politicking now, so they are launching pointless campaigns."

In an editorial on Monday, The Daily Star said that "the interest rate in the commercial category is considered to be rather moderate".

Responding to the BNP`s demand that multilateral financing agencies could be approached, the editorial said that soft-term loans with only a service charge are usually difficult to obtain, particularly in the present global financial climate.

"It is not the amount of loan that is so important as the definitive stimulus being provided to a massive undertaking that both sides are obliged to fulfil so that the dividend that Bangladesh is looking for in terms of infrastructure development, removal of trade gaps, service charge revenues and wider regional connectivity are attained by it," the newspaper said.

The loan put "Indo-Bangladesh relations on a new, but potentially stronger footing".