The cabinet has approved the agreement allowing the government to acquire a €75.9million loan from International Development Association (IDA) upgrading the Ngoma-Nyanza unpaved road that passes through three districts namely Ngoma and Bugesera (Eastern Province), and Nyanza (Southern Province).
The project is subdivided into two lots: Lot 1: Ngoma – Ramiro (52.8 km) and Lot 2: Kibugabuga – Gasoro (66.55 km).
The loan is to be paid in 21 years at an interest rate of 2.85%.
The IDA loan has been extended for transport projects in countries surrounding Lake Victoria. US$65 million will be provided by Japan, and the government of Rwanda will provide US$23 million.
While explaining to cabinet, the Minister of Finance and Economic Planning Amb. Claver Gatete said that the loan is categorized into two phases.
Hon. Mporanyi Theobald observed that the loan will help in establishing infrastructures that will facilitate trading with Burundi, and Tanzania. However, he asked why Government opted for a loan with the very high-interest rate.
In response, Minister Gatete explained that the terms are fair. “This time, we have negotiated, that is why we have agreed upon that cost. Nevertheless, when you get the money at 2.85% interest rate and you take into consideration the 9-year period of grace, paying in a 21 year period is almost equivalent to the money we get from Exim Bank of China, because with Exim, the interest rate is 2%, and a 5 year period of grace, thereafter paying back within a 20 year period.”