Bangladesh has paused taking on new borrowing packages from Japan after the cost of Japanese development finance rose sharply, according to officials cited by The Financial Express.
The interest rate on loans from the Japan International Cooperation Agency has risen to 3.05 percent for a six-month period and could increase to 3.55 percent from October, the report said. Bangladesh had previously benefited from Japanese development loans at rates as low as around 1 percent.
Officials said Dhaka had sought a reconsideration of the tougher lending terms, but the request did not produce the expected change. The government has therefore adopted a more cautious approach to signing new borrowing packages under the higher rates.
Japan is one of Bangladesh’s most important bilateral development-finance partners, with funding across major infrastructure projects. Higher borrowing costs could influence project selection, debt sustainability and efforts to diversify sources of external financing.
Source: The Financial Express, citing relevant government officials.