Print Edition - 2014-09-16 | MONEY
Identify projects to use $1b line of credit: Mahat
Sep 15, 2014-Finance Minister Ram Sharan Mahat on Monday directed government officials to identify potential projects in which the $1 billion line of credit offered by India could be utilised.
Indian Prime Minister Narendra Modi, during his Nepal visit in the first week of August, had offered the credit to invest in Nepal’s infrastructure sector.
Mahat on Monday invited secretaries of various ministries and director generals of various departments to discuss the matter. Mahat asked them to submit a list of big, but limited projects and start their feasibility study.
“The Finance Ministry is ready to provide the budget if needed,” he told them, according to a ministry statement. Mahat asked them to submit the list that can be implemented soon at a time when India is so generous.
India has already signed a draft of a loan agreement which is currently under consideration at the Law Ministry. India has announced providing the loan at one percent interest. “But there will be additional 0.5 percent commitment charge and 0.25 percent service charge as per the draft of loan agreement,” said Madhu Marasini, chief of the ministry’s international cooperation coordination division.
In the previous line of credit, which started in 2006 and is worth $350 million, the interest rate is 1.75 percent. The amount is being utilised in various infrastructure projects, including roads and transmission lines. Compared to the interest rate India imposed on a similar loan to Bangladesh in March this year, the rate offered to Nepal is much lower. Indian and Bangladeshi media reported at that time quoting government officials that the interest rate would be LIBOR plus (London Inter-bank Offered Rate) 2.5 percent.
Other conditions include 50 percent of the goods and services paid for with the money should be Indian. “As the loan has to be received from India’s EXIM Bank, conditions like requiring buying goods and services from the donor country are usually applied,” said Marasini.
Published: 16-09-2014 09:56