World Bank to loan Rs 1,750cr to Kerala for flood recovery


New Delhi: The World Bank will be providing a development policy loan of $250 million (approx Rs 1,750 crore) as its first tranche for rebuilding of Kerala post-floods, according to an agreement reached recently. It is also expected that Kerala will soon get the first tranche of Rs 720 crore from the German Development Bank (KFW) for building roads. The total financial assistance committed by the bank is Rs 1,360 crore.

The amount has been agreed on the basis of World Bank representatives' assessment held in the state, their discussions with Rebuild Kerala Initiative and state government officials and will cover sectors as water supply, irrigation, sewerage network and agriculture.

The World Bank board meeting scheduled to be held on June 27 will consider the loan. Once approved by the World Bank, the Centre too needs to gives its go-ahead.

The funds will be given to the state in two tranches. In the first tranche, $ 159.6 million will be provided by the International Development Association (IDA) at 1.25% annual interest. It has a repayment period of 25 years. There is a grace period for the first five years.

In the second phase, $ 90.4 million will be provided at an average interest rate at which leading banks borrow funds from other banks in the London market or Libor rate. It has to be repaid in 19.5 years.

As against the global assistance for projects like the Kerala State Transport Project, the aid will be made available to the exchequer as budgetary support. Since the state will have the flexibility on disbursing the funds, it will have to take special care not to divert funds.

The state had identified the four sectors that need assistance for rebuilding to the World Bank. The World Bank will provide necessary assistance and advice for carrying out the projects.

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