Question: To qualify as official development assistance ( ODA ) , development loans must have a grant element of at least 2 5 percent, calculated using

To qualify as official development assistance (ODA), development loans must have a grant element of at
least 25 percent, calculated using a stated annual interest rate of 10 percent. To encourage Bangladesh
to take in more Rohingya refugees, US Secretary of State Antony John Blinken promised the following
loan: $100 million, to be amortized over 15 years by 30 semi-annual payments, after a grace period of 5
years during which only interest would be paid semi-annually. The U.S. would charge interest at a stated
annual rate of 8 percent. Determine whether or not this loan would qualify as ODA. What is the maximum
interest rate the US could charge for this loan to qualify as ODA?

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