South-South Ideas: How Coherent Are Trade and Investment Policies of the Southern Finance Providers? A Case Study on Indo-Bangladesh Lines of Credit

By March 18, 2019 October 26th, 2020 Research, South-South Global Thinkers, South-South Ideas

This study  uses the Indo-Bangla lines of credit (LoC) as a test case to determine the extent to which the projects undertaken under LoCs are aligned with Bangladesh’s national policy. The study proposes a framework that takes into account: (i) national policy alignment; (ii) priorities alignment; (iii) SDG coherence; (iv) process efficiency; and (v) accountability modalities, to assess the level of policy coherence in the context of the SSC. The study finds that the projects selected for financing under the LoCs are aligned with Bangladesh’s policies and priorities in the areas of trade and investment which are geared to strengthen global and regional integration of Bangladesh through transport connectivity initiatives.

Additionally, the study assessed the LoC projects will contribute towards the achievement of a number of SDGs which includes SDG9 (sustainable infrastructure) and SDG1. SDG2, SDG7, SDG8, SDG10 and SDG17 through stimulating opportunities of income augmenting employment, raising resilience, helping the cause of food security and also energy security. However, the study indicates that due to embedding conditionalities in Indian LoCs related to the procurement of goods and services from India, they have had adverse implications in terms of forgone benefits and reduced returns on investments which limits the scope of the transfer of technology and skills to Bangladesh. The study provides several recommendations to enhance the interest of coherence in SSC which includes the relaxing of some of the more stringent conditionalities; greater involvement of local government bodies, civil society organizations and private sector in the monitoring mechanism of the LoCs; strengthening capacities of institutions and agencies which implement projects supported by the LoCs;  and the strengthening of the monitoring mechanisms that oversee implementation of SSC projects.