Southern States - Kerala   

Govt. to tap LIBOR-based lending facility of ADB

By Roy Mathew

THIRUVANANTHAPURAM DEC. 8. The Government will be tapping LIBOR-based lending facility of the Asian Development Bank (ADB) for the loan it is availing of for the Modernising Government Programme and Financial Restructuring.

The draft agreement signed by the Government with the ADB states that it was the independent decision of the borrower to avail of the (London Inter-Bank Offered Rate) LIBOR-based lending facility. The full details of the agreement are yet to be disclosed by the Government.

The loan would be availed of in U.S. dollars. However, it is not clear whether the Central Government is choosing the fixed or floating interest rates under the LIBOR-based facility (LBL). Currently, the fixed rate is 6.34 per cent in dollars. The floating rate, which would change every six months, is currently 2.55 per cent for the public sector. Public sector borrowers will have to bear additional charges under the LBL facility if ADB's costs of funds go up. Variations in costs are passed on to public sector borrowers through a system of rebates and surcharges that keep the ADB's business operations practically risk-free. The Chief Minister, A.K. Antony, has, however, denied that any surcharges would be payable on the loan.

The front end free chargeable on the loan is understood to be one per cent. This is half a per cent higher than what was stated by the country director of the ADB, Frank Polman, at a press conference here six months ago. The commitment charges payable would also be one per cent.

As to the exchange rate risks, the understanding is that the Centre would bear the risk. However, the Centre is considering a policy change in this respect. As of now, the ADB loan would be clubbed with grants from the Netherlands Government and other agencies and passed on to the State as Additional Plan assistance. The loan component of this assistance, which is 70 per cent, would carry an interest rate of 11.5 per cent in rupees.

The implementation of the programme would be under the close supervision of the ADB and the Central Government. Several conditions would apply regarding maintenance of accounts and auditing.

Printer friendly page  
Send this article to Friends by E-Mail

Southern States

News: Front Page | National | Southern States | Other States | International | Opinion | Business | Sport | Miscellaneous |
Advts: Classifieds | Employment | Obituary |

Stories in this Section

• Kerala: Plan campaign begins today
• Drought relief: Central team arrives
• Mystery shrouds whereabouts of two tribal smugglers
• Doctors protest against IMA leadership move
• Pallavoor Appu Marar is dead
• Metropolitans begin fast today
• Sanjayan had prophetic vision: Panicker
• Govt. to tap LIBOR-based lending facility of ADB
• Animal Husbandry dept. not to submit report to PCB
• Maintenance grant sought for hospital
• APRS disputes official claim on Somasila water

Copyright © 2002, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu