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Exim Bank of India today signed two separate line of credit (LOC) agreements with Tanzania and Mozambique so as to further strengthen the financial linkages with the two African countries.
Under the agreements, Exim Bank is providing LOC of $ 36.5 million to Tanzania and $ 20 million to Mozambique. Both the LOCs are for long duration (between 10-20 years) with concessional credit and are being provided on project basis. The Indian Government has provided guarantee for the LOCs.
The agreement with Tanzania was signed by Mr T.C.A. Ranganathan, Chairman and Managing Director of Exim Bank of India from the Indian side and Mr Mustafa H Mkullo, Minister for Finance and Economic Affairs on behalf of Tanzania.
In the case of LOC agreement with Mozambique, Mr Ranganathan signed it from the Indian side and Mr Venancio Simao Massingue, Minister of Science and Technology for Mozambique. Both the agreements were signed at the 7{+t}{+h} CII-Exim Bank Conclave on India Africa Project Partnership 2011 being held in the capital.
So far, including today’s agreement, Exim Bank of India has provided 8 LOCs to Mozambique involving a cumulative amount of $ 160 million. In the case of Tanzania, Exim Bank has till date signed two LOCs involving an amount of $ 76.5 million including the one for $ 36.5 million signed today.
Earlier, in his keynote address at the conclave, Economic Affairs Secretary in the Finance Ministry Mr R Gopalan said that the bilateral financial linkages should be more broad based and not limited to the LOCs. At the same time, he noted that the relevance of concessional credit has not reduced and pointed out that just a month ago the Exim Bank of India had signed a agreement with Malawi for providing $ 50 million LOC for financing exports and consultancy services for projects in that African nation.
Mr Gopalan highlighted three key issues (relating to financial linkages) that merit close attention of India and African leadership—1) Whether LOCs are effectively utilised by host Governments? 2) Whether there is effective knowledge transfer through concessional credit route and whether Indian consultants can be accorded greater role in the projects of Africa that are financed by the Indian Government
He also suggested that concessional credit should extend beyond the ambit of project financing to program financing.
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