Print Edition - 2015-08-19 | MONEY
Officials weigh options to activate infrastructure, economic widows
- saarc development fund
Aug 18, 2015-
Officials from South Asian nations on Tuesday discussed several options to activate infrastructure and economic widows of the Saarc Development Fund (SDF) two days ahead of the 7th meeting of the Saarc Finance Ministers in Kathmandu. The meeting is scheduled for August 20.
The Saarc Summit held here last year had decided to activate these two windows. Currently, the social window is operational, under which grant and technical assistance are provided to member countries to invest in projects related to poverty alleviation and social development.
The Infrastructure window would cover projects in the areas of energy, power, transportation, telecommunications, environment, tourism and infrastructure. The economic window would primarily be devoted to non-infrastructural funding.
“While activating the infrastructure window, loan should be provided for long-term infrastructure projects,” said Madhu Marasini, chief of the international economic cooperation coordination division at the Finance Ministry. “We are discussing how much interest rate should be fixed and whether the available fund is adequate to finance long-term projects.”
As per the SDF Charter, paid-up capital of the fund is SDR 200 million. “Given the limitation of the capital, the discussions are underway on whether to fund small and medium scale projects,” said Marasini.
Talks are also being held over the possibility of developing infrastructure at the interest of at least three nations, according to Marasini, who is heading the Nepali team at the talks on the SDF.
As per SDF Charter, projects should be located at one or more member states with significant economic interest for three or more member states.
Beside the SDF, the meeting is to discuss the draft of the Saarc Agreement on Promotion and Protection of Investment, establishment of Saarc Development Bank, currency swap arrangement and trading in local currencies.
Preparation of a proposal to allow greater flow of financial capital and intra-regional long-term investment, and reviewing the progress in the implementation of the recommendations of the sixth meeting are other agendas.
Marsini said the draft of the regional investment promotion and protection agreement has already been prepared. “There is a disagreement on one of the provisions and we will try to sort out the issue,” he said.
As far as the Saarc Development Bank is concerned, India had last year proposed establishing the bank at the eighth meeting of the South Asia Free Trade Area (Safta) Ministerial Council held in Thimphu. However, the Indian media reported the southern neighbour had dropped the plan.
“There will be discussion on whether a regional bank is necessary in the context that the Asian Infrastructure Investment Bank and New Development Bank of the BRICS nations have already been established,” said Finance Secretary Suman Sharma.
The currency swap deal and use of local currencies for settling trade-related payments are expected to help boost regional trade.
Published: 19-08-2015 08:00