Chief Adviser Muhammad Yunus to Visit Japan
Chief Adviser of Bangladesh’s interim government, Professor Muhammad Yunus, is scheduled to visit Japan from 28 May to 30 May 2025. During this visit, Bangladesh is expected to sign two major loan agreements and one grant deal with Japan, amounting to a total of $1.079 billion.
This visit is seen as a significant step in strengthening development cooperation between Bangladesh and Japan.
Breakdown of the Financial Agreements
According to senior officials at the Economic Relations Division (ERD):
- A loan of $656.16 million (around ¥92.08 billion) will be used for the Joydebpur–Ishwardi rail expansion project.
- loan of $418 million (around ¥63 billion) will be given as budget support.
- A grant worth $5.44 million (about ¥835 million) may also be signed for the “Improvement of Equipment for Air Pollution Monitoring Project”.
Read More: Dr. Muhammad Yunus Japan Visit Brings New Opportunities for Budget Support and Strategic Partnership
Agreements Almost Finalised
An ERD official, who asked not to be named, said that preparations are nearly complete for the signing. The loan documents prepared by JICA (Japan International Cooperation Agency) have already been sent to the law ministry for review. After the legal approval, the summary will be sent to the chief adviser for his final consent.
Why the Shift from China to Japan for the Rail Project?
Originally, the Joydebpur–Ishwardi railway project was planned as a joint government project with China. In 2019, it was approved by the Executive Committee of the National Economic Council (ECNEC) with a budget of Tk 14,250 crore. China was supposed to fund Tk 8,757 crore, and the Bangladesh Railway had signed a Tk 10,302 crore contract with China Railway Engineering Construction Company.
However, this plan faced criticism because the Chinese proposal was considered too expensive. In 2021, an inter-ministerial committee reviewed the project and found an extra Tk 217 crore in estimated costs.
When China objected to the revised budget, the government looked for other funding options and eventually approached Japan, which agreed to finance the project through JICA.
Further Funding May Be Needed
Md Golam Mostafa, the project director, said that Japan’s initial funding will be $656.16 million. But more foreign loans may be required as the project continues. A Japanese consultancy firm is expected to be hired within a year to create a detailed design. This design will help determine how much more funding will be needed.
He added that whether Japan provides more money will depend on the design and future negotiations. The Bangladesh Railway hopes to finish the project by 2030.
Budget Support to Handle Economic Crisis
The $418 million budget support loan from Japan is aimed at helping Bangladesh handle its current economic crisis. This support is part of Japan’s Development Policy Loan for Economic Reform and Climate Change Resilience.
According to ERD sources, negotiations were completed last week, and the final agreement will be signed during the chief adviser’s visit.
This discussion started again after the International Monetary Fund (IMF) confirmed that it would release the 4th and 5th tranches of its $4.7 billion loan in June. Many development partners, such as the World Bank and Asian Development Bank, usually wait for the IMF’s approval before giving budget support. While bilateral lenders like Japan are not required to follow this practice, Japan still chooses to do so.
Japan: A Strong Partner in Development
In the current fiscal year, Japan has already signed loan and grant deals worth $1.036 billion with Bangladesh. These include:
- $830.88 million in loans
- $205.49 million in grants
As of 30 June, last year, Japan’s outstanding loans to Bangladesh stood at $11.25 billion, making Japan the largest bilateral donor and the third-largest development partner overall.
Source: TBS
