Bangladesh has set a new record in receiving foreign loans that has helped the government continue economic development by accelerating development work even during the coronavirus pandemic.
Economists say it is a good sign for the Bangladesh economy that the disbursement of loans by development partners, including the World Bank and ADB, increased amid the pandemic, which affected economic activities across the globe.
In the first six months of the current financial year 2021-22, Bangladesh received loan assistance of $4.17 billion (almost Tk 36,000 crore) from various donor countries and organizations, up 39.14 percent over the same period of previous fiscal amounting $3 billion, according to the Economic Relations Division (ERD) data.
Earlier, Bangladesh had never received such an amount in six months.
The ERD data said the development partners pledged $4.40 billion to Bangladesh. The country has received almost $4.17 billion.
Of the disbursed loan, $4.02 billion was received as project assistance while $150.67 million has been received as grant.
State Minister for Planning Shamsul Alam said ‘we are happy to get more loans in times of crisis.’
“Honestly, we are getting more loan assistance than we expected. There is no problem in corona vaccination and other expenses,” he mentioned.
He said that during the Covid-19 epidemic, “Rapid loan assistance was received from donor countries and organizations, including the World Bank, ADB and JICA. We (the government) presented our needs to them well. They responded quickly, still giving. That's why we were able to turn around very quickly from the crisis.”
Shamsul Alam hopes that this trend of foreign debt will continue in the future as well.
Dr Atiur Rahman, former governor of Bangladesh Bank, told Bangladesh Post, “Bangladesh got huge foreign loans from development partners that helped speed up the development work, including the mega projects.”
The economists say development partners are providing additional loans to buy vaccines and other health equipment to cope with the pandemic.
The country managed loans at low interest rates with a long grace period which will bring good to the country, Atiar said.
“Bangladesh's public debt-to-GDP ratio is below 40. This is not bad,” he added.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said, “Foreign loan has helped the government a lot in tackling the crisis. More than $7 billion in foreign aid for two consecutive years is impressive. This positive trend has continued in the current financial year as well. Even in this difficult time, the government did not have to face any kind of financial crisis. Development work has not stopped, even there was no problem in buying the vaccine.”
However, Bangladesh received $7.10 billion, equivalent to Tk 60,350 crore, in assistance from development partners in the outgoing 2020-21 fiscal year, according to the Economic Relations Division (ERD).
Of the total foreign aid, $ 6.59 billion (Tk 56,000 crore) came as loan and the rest as grants.
Bangladesh received the highest amount of foreign aid in the 2019-20 FY, when the figure reached $7.38 billion (Tk 62,730 crore).
According to ERD, most loans were received from the World Bank in the last FY -- $2.70 billion (Tk 22,950 crore).