Kerala and World Bank in talks for another $250 million loan

The state government is confident the decision to sanction more funds to Kerala will be taken during the World Bank board meeting, scheduled to be held in June.

Published: 16th January 2020 06:12 AM  |   Last Updated: 16th January 2020 06:12 AM   |  A+A-

Express News Service

KOCHI: The Kerala government is in talks with World Bank for a $250-million loan, nearly seven months after it received the same amount from the multi-lateral agency for rebuilding the state’s infrastructure, especially roads, destroyed in the 2018 flood.

The negotiation for the loan is in addition to the $200 million soft loan agreement the state had signed with German bank KfW in November and $300 million it hopes to get from the Asian Development Bank for water supply projects.

“We’re trying to rope in KfW to sanction an amount along with the World Bank loan. If we get KfW on board, then we’ll request for a bigger loan from the World Bank, higher than the $250 million which we are now negotiating,” said Principal Secretary (Revenue) and Rebuild Kerala Initiative CEO Venu V. “If we get KfW to co-finance the projects, then we’ll go for some hard negotiations with the World Bank,” he added.

The state government is confident the decision to sanction more funds to Kerala will be taken during the World Bank board meeting, scheduled to be held in June.

Regarding KfW’s $200-million loan utilisation, Venu said tenders have been issued for various projects. “There are no issues regarding the sanctioning or utilisation of KfW money. Once we award the tenders, money can be drawn,” he said.

The World Bank’s loan last year was under the First Resilient Kerala Programme aimed at enhancing the state’s resolve against the impact of natural disasters and climate change. Of the $250 million, the bank offered $160 million at a lower rate of less than 1.5 per cent with a repayment period of 30 years.

The programme represented the World Bank’s first ‘state partnership’ in India. It was also the first of two Development Policy Operations aiming to mainstream disaster and climate resilience into critical infrastructure and services. The World Bank has been working closely with the central and state governments following the floods in August 2018 to assess the impact of the natural calamity and assist in the recovery and reconstruction. The 2018 flood in Kerala led to a severe impact on property, infrastructure as well as lives and livelihoods of people. One-sixth of the people – about 5.4 million – were affected while 1.4 million were displaced.

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