Padma Bridge: Foreign Reserve Suffered No Blow Thanks to Agrani Bank

Padma Bridge Foreign Reserve Suffered No Blow Thanks To Agrani Bank

The Padma multipurpose bridge, dubbed the ‘most dreamed mega project’, was inaugurated on 25th June 2022. The 6.15 kilometers bridge is the longest in the country and 122nd in the world, an engineering marvel. This bridge will create direct road transport connectivity for the 21 districts in the country’s southwest region. Built on 42 pillars at a depth of 128 meters and 41 spans of 150 meters each, the double-deck bridge has a single-track dual gauge rail line on the lower deck and 4-lane road on the upper deck.

The construction cost for the main bridge, access roads, river training, and others are projected at 30,193 crores BDT or 3.56 billion USD. The government of Bangladesh had paid for the whole construction of the bridge when international lenders and the World Bank canceled financing of the Padma Bridge project in 2011.

When announced first in 2012 that the government would pay for the project, economists expressed concerns that the construction of the bridge would put pressure on the country’s foreign reserve. However, 10 years later, when the bridge’s construction finally finished, the foreign reserve had no effect whatsoever, thanks to the state-owned lender, the Agrani Bank Ltd. Instead, the reserve of US greenbacks has increased by almost 3 times in the last decade.

In 2012, Agrani Bank Ltd notified the government that it could supply foreign currencies required for making payments to the international contractors and consultancy firms involved in the project’s construction. Bangladesh Bank had offered to supply foreign reserves to the state-owned lender if there was ever any shortfall. However, since 2013 the state-owned lender has met the project’s foreign currency requirements from its own earnings. As of May 2022, Agrani Bank Ltd. had made payments of 1.48 billion USD to international contractors and consultancy firms. Agrani Bank must pay 2.4 billion USD as part of the deal, which means that $920 million in payments will have to be cleared very soon. The state-owned lender never had to buy any greenbacks from the central bank, as it emphasized on exports and remittances on its service, the top two sources of foreign currency inflow for Bangladesh. 

In 2012-13, Bangladesh Bank had a foreign reserve of 15.32 billion USD. A decade later, in May 2022, the country’s foreign reserve stood at 42.30 billion USD. Thanks to rising remittance and export earnings from the RMG sector, the foreign reserve of Bangladesh has reached such a height.

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