The decision was taken by Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on October 14.
The government will provide funds to HMC in local currency to enable it to supply equipment and machinery to Bangladesh, whereas the latter will return loan in dollars.
Sources said that as the GoPs own borrowing cost averages 4.5 percent and the credit is being extended at a fixed interest rate of 3.5 percent, a subsidy of 1 percent, amounting to Rs 69 million, over the life of the loan would be involved.
It may be mentioned here that Bangladesh Sugar & Food Industries Corporation has also identified India and China as alternative sources for seeking state credit facility. These countries would stand to win the contract for Carew & Co Sugar Mills project in case attractive credit assistance from Pakistan is not forthcoming.