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With Sri Lanka in mind Bangladesh minister warns against China’s BRI lending

China's Foreign Minister Wang Yi in Bangladesh (Photo Credit: Chinese Foreign Ministry)

Bangladesh Finance Minister AHM Mustafa Kamal has come out openly warning countries to be watchful of Chinese loans which are directed through the Belt and Road Initiative (BRI). Interestingly, China’s Foreign Minister Wang Yi just wound up his Dhaka trip on Sunday. Dhaka is currently negotiating with the International Monetary Fund for a financial assistance package. It has also sought budgetary support from the Japan International Cooperation Agency (JICA). However, China has been fast expanding its presence in Bangladesh as well.

China had committed to invest $40 billion in various infrastructure projects and joint ventures under the BRI in 2016 during Chinese President Xi Jinping's visit to Bangladesh.

“Authorities in Bangladesh are well aware of the fact that Chinese loans could land them in a bigger trouble but there is a need for infrastructure development and mostly the terms and conditions of the deals are not tilted too much in favour of the Chinese.. we have seen what has happened to Sri Lanka. Beijing’s loans are driven by their own interests and countries need to understand that.. There is a growing trust deficit with China,” a Dhaka based analyst told India Narrative.

Bangladesh’s foreign exchange reserves have been depleting rapidly. Its foreign exchange reserves stood at $39.48 billion as of July 27 compared to $45.7 billion a year earlier.

Sri Lanka, which had been heavily dependent on Chinese assistance for supporting its economy, has officially declared bankruptcy. The Sri Lankan economic crisis has led to growing concerns across the world, especially for the countries which have received big ticket loans from Beijing.

“Everyone blames China. China cannot disagree. It’s their responsibility,” the New York Daily Paper quoted Kamal as saying. He also added that China too on its part must do a thorough analysis of the project for which it is lending.

An Observer Research Foundation report said that ever since Sri Lanka plunged into a full-fledged economic crisis, China—the island state’s largest bilateral creditor and trade partner—has provided it with humanitarian assistance of a mere $74 million. China is also yet to decide on Sri Lanka’s request for loan restructuring and additional financial aid worth $4 billion, the report added.

Wang Yi, after winding up his Dhaka visit said that the China-Bangladesh relations were “founded on the basis of profound mutual trust of the elder generations of national leaders of the two countries, on the basis of jointly striving for national independence and dignity, and on the basis of jointly safeguarding legitimate interests of developing countries.” He also thanked Dhaka for adhering to the One China policy.  

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