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Foreign aid payout surges


Published : 21 Jun 2021 10:12 PM | Updated : 22 Jun 2021 01:43 AM
  • Foreign aid disbursement increased to US$3.72 billion in Jul-Feb period of the current FY from US$3.48 billion in same previous period.
  • Foreign aid commitment rose to US$3.96 billion in FY21 Jul-Feb period from US$3.25 billion in the same period of FY20. 
  • Out of the US$3.96 billion, development partners confirmed US$3.38 billion as loan and US$0.58 billion as grant.

Disbursement of foreign aid increased significantly as the ERD has been continuously taking various initiatives to ensure maximum utilisation of project assistance allocated to ADP projects.

 Besides, the government agencies also took cautious approach in taking fresh projects and similarly, the project implementing agencies had faced the hurdles for the COVID-19 impact which slowed down the project executions over the months, the official added.

The foreign aid witnessed a rise as Asian Development Bank (ADB) and Japan disbursed some large loans, including budgetary support of US$820 million.

The disbursement of foreign aid increased by 6.90 per cent to US$3.72 billion in July-February period of the current fiscal year (FY21) compared to US$3.48 billion in the corresponding period in the previous fiscal year (FY20), according to the latest data of the Economic Relations Division (ERD).

Out of US$3.72 billion, US$3.60 billion came as concessional loans while US$0.12 billion came as grants, said the ERD.

On the other hand, development partners’ commitments of foreign aid also increased by 21.85 per cent to US$3.96 billion in the same period of FY21 from US$3.25 billion in the same period of FY20. Out of US$3.96 billion, the development partners confirmed US$3.38 billion as loan and US$0.58 billion as grant, according to the ERD.

“Both the aid commitment and disbursement to Bangladesh could be boosted further if the COVID-19 pandemic does not continue in the country," said an ERD official.

The official said the development partners could not send their missions to Bangladesh for completing formalities for disbursement of aid due mainly to COVID-19 pandemic.

Moreover, there are biennial meetings at the Secretary-level and annual meetings at the Finance Minister's level to review the progress of the most allocated projects, said a finance ministry official.

Apart from these initiatives, the progress of the project implementation is monitored through a series of inspections for identifying the problems that may arise during implementation of the projects, he informed.

Bangladesh takes Official Development Assistance (ODA) mainly from multilateral organisations or countries that provide soft loans or grants. The country’s largest development partner is the World Bank (WB). Other development partners include the Asian Development Bank (ADB), Japan, the Islamic Development Bank (IDB), China, the United Nations (UN), the UK’s DFID, Russia, Germany and India.

Meanwhile, the net foreign direct investment (FDI) witnessed a fall by 31.21 per cent to US$606 million in July-February period of FY21 from US$881 million in the corresponding period of FY20 because of COVID-19 that hit hard the global economy, according to the BB’s balance of payments data.

Bangladesh’s low labor costs are generally believed to be attractive to foreign investors but they were hesitant to make fresh investments amid COVID-19.

Experts said Bangladesh needs to take steps for improvement of infrastructure, and remove such other impediments as the shortage of energy and weak transmission infrastructure, lack of consistency in policy and regulatory framework and scarcity of industrial land.

The government needs to address these impediments to attract more FDI to the country in order to ensure the country’s economic recovery from the ongoing coronavirus pandemic, said the experts.