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10th-Sep-2018

IDB's project assistance hits 6-yr low: Trade financing goes up in last several yrs

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Staff Reporter :
Project assistance by Islamic Development Bank (IDB) to Bangladesh fell down to a meager sum of US$ 4.44 million in the immediate-past fiscal year (FY) due to down scaling of project aid policy from both the bank and government sides, officials say.
However, trade and insurance financing went up significantly by the bank to the country in last several FYs.
"Implementation of all of the projects was completed mostly which initiated under the financing from IDB. That's why the disbursement amount shows low. But, trade and insurance financing from IDB is still benefiting us significantly," Kazi Shofiqul Azam, Secretary of Economic Relations Division (ERD), told The New Nation on Sunday.   
He added, "Every FY, we are borrowing around US$ 1.0 billion to US$ 1.5 billion in recent years. Though it is short term loan, this financing is aiding our petroleum import and covering insurance costs in imports."   
Data from Bangladesh Economic Review 2018, an annual budgetary publication of the government, shows that disbursement of project financing by IDB was US$ 4.44 million in FY 2017-18. It was US$ 39.83 million in FY 2016-17, $100.49 million in FY 2015-16, $132.92 million in FY 2014-15, $76.94 million in FY 2013-14, $22.82 million in FY 2012-13 and $17.18 million in FY 2011-12. Speaking to this correspondent, the ERD secretary admitted that the government has squeezed     
project financing from IDB in its fiscal policy and looked for better benefit in imports by getting short-term loan facility from the bank within the shortest notice.
"This is more beneficial for us. We are getting loan at lowest rate of interest than Standard Chartered or other private banks in case of public imports," he said.
"Yes, there were some inconveniences in approving and disbursing loans. On this backdrop, the IDB set up a new regional office in Dhaka today (Sunday). I hope, this new office will help accelerate loan proceeds. The country's private sector will also get more loans from the IDB," he added.
Meanwhile, visiting IDB President Dr Bandar M.H. Hajjar said on Sunday that the bank will enhance its support towards various science and technology-based projects in Bangladesh with the aim to aiding this south Asian country to achieve UN's Sustainable Development Goals (SDGs).
The IDB President is now in Dhaka on the occasion of launching of the bank's new regional hub at IDB Bhaban at Agargaon in the city. The IDB President said the regional hub is established as part of the bank's continued commitment to support sustainable socio-economic development in the region.
He said the new Regional Hub in Dhaka would facilitate the Bank's numerous projects in Bangladesh, spanning from agriculture, education, energy, industry and mining, transport, water, sanitation to urban services and enhancing the capacity of the country's public and private institutions.
Among the IDB's 57-member countries, Bangladesh is one of the largest beneficiaries of financing. Aggregated financial assistance from IDB Group to date was US$21.7 billion, according to a statement issued from IDB Dhaka office.
Bangladesh's subscription to IDB registered US$ 509.96 million, which is 1.01 percent of IDB's total capital worth US$ 33 billion. Annually, the bank operates around US$ 10 billion among member countries, according to IDB data.
The IDB President said the bank will further consolidate its relations and strengthen partnership between Bangladesh and IDB.
Commenting on the IDB's presence in the region, Dr. Bandar M.H. Hajjar said, "The IDB has long been holding a close relationship with Bangladesh as it continues to move towards a prosperous future with a resolute commitment to the SDGs. Our Dhaka regional office will focus on partnering with local stakeholders to drive the socio-economic development in the country and provide a platform for Bangladeshi people to build a prosperous future."
His visit included singing of a Memorandum of Understanding (MoU) between the IDB Group and the Government of Bangladesh, in support of the country's capacity in cotton varieties development.