The project is on constructing a 24-kilometre elevated expressway connecting Dhaka to Ashulia at a cost of Tk 17,653 crore, or around $1.2 billion.

China is providing 85 per cent of the cost as a loan at 2 per cent interest, payable in 20 years, including a grace period of five years. The remaining 15 per cent is being borne by the Bangladesh government.

The Export-Import Bank of China is paying the loan part in US dollars to the Chinese contractor, China National Machinery Import & Export Corporation, which is implementing the project. The Bangladesh government will reimburse the bank.

As for the 15 per cent of the Bangladesh government, Shahabuddin Khan, the project director, said, “We convinced them (the contractor) to accept the bill in the taka as they will have some spending to do in Bangladesh.”

“They accepted our proposal taking into consideration the present context,” he told.

According to him, over 250 Chinese citizens, including engineers and staff, and 1,000 Bangladeshis are now working on the project.

To address a demand-supply gap in the foreign exchange market, the Bangladesh Bank has sold foreign currencies and allowed the depreciation of the taka.

Owing to higher import bills compared to combined receipts from export and remittance, the foreign exchange reserves plunged to $29.92 billion on May 31 from $42.20 billion on the same day last year, data from the central bank showed.

Prime Minister Sheikh Hasina inaugurated the construction in November last year and the first payment of Tk 1,339 crore, or $130 million, was made in October. Of the sum, the Bangladesh government’s portion amounted to Tk 34 crore.

The next payment of Tk 600 crore, or $58.25 million, will be made in June and of it, the Bangladesh government will pay Tk 90 crore.

“This will continue until the situation pertaining to the foreign currency reserves improves,” said Khan.

Once completed, the expressway will connect Hazrat Shahjalal International Airport with Abdullahpur, Ashulia, Baipail and Dhaka Export Processing Zone on the Nabinagar-Chandra highway and ensure quick entry and exit from and to the capital.

It will connect up to Kutubkhali under Jatrabari Police Station in Dhaka.

Over four crore people from 30 districts, including the northern districts, will benefit from the expressway as it will make the movement of people and goods easier and quicker.

The expressway project document forecasts a 0.217 per cent boost to the country’s gross domestic product.

More than 5 per cent of the project has been implemented and it would reach 8 per cent by the end of June.

“We have a target to complete 30 per cent of the overall project by next fiscal year,” Khan said.

This is the first bill payment in the local currency for a mostly foreign loan-funded project, confirmed Md Masudul Haque, joint secretary to the Foreign Aid Budget and Accounts wing of the Economic Relations Division.

“If the same could be done for all such projects, it will turn out positive for the country and help save some foreign currencies.”

This has been made possible through fruitful negotiations with the contractor, believes Prof Selim Raihan, executive director of the South Asian Network on Economic Modeling.

“It is a positive initiative and it will help reduce pressure on the forex reserve.”

“This initiative will also help money circulation and the local suppliers will benefit entirely. If this arrangement can be introduced to the projects funded by foreign loans, it will bring a positive impact on the economy in the long run.”