The World Bank has cancelled a $1.2 billion loan to Bangladesh, citing rampant corruption in the country, reports the Wall Street Journal.
The World Bank suspended the loan in October, prompting the poor country to spend $180 million of its own money on the Padma bridge, which is costing $2.9 billion. 40% of Bangladesh ‘s development spending comes from foreign donor aid.
According to a statement from the World Bank, the project is surrounded with “a high-level corruption conspiracy” after it suspected Bangladesh officials of receiving improper payments from Canadian firm, SNC-Lavallin. The bank said that Bangladesh failed to address graft and corruption in the country since it suspended its loan.
Bangladesh’s finance minister Abul Maal Abdul Muhith told the Journal that the World Bank pressured the country to select a Chinese contractor for the Padma project, which had previously been disqualified for fraud. Mr. Muhith denied allegations of corruption.
The reluctance of other banks, such as the Asian Development Bank and the International Monetary Fund, to approve loans for Bangladesh is exacerbated by corruption, the Journal reports.