Foreign aids disbursement, commitment declined31 January 2023
Staff Reporter :
Disbursement of loans from development partners have declined in first six months of the current fiscal year (2022-23) due to the slow implementation of the projects.
They have also reduced their commitment to provide loans for various development projects in the country during July-December period.
The slow pace in assistances from the development partners is forcing the government to borrow from different multi-lateral lenders like International Monetary Fund and World Bank, economists said.
Development partners have disbursed $3.785 billion, which is 0.39 billion less than the corresponding period of the previous year. The amount was $4.17 billion during the same period of the last year, according to monthly report of the Economic Relation Division (ERD) of the Finance Ministry.
The ERD report also showed that the development partners have also reduced commitment of assistance by around $2.64 billion as Bangladesh received promises of foreign aid worth $1.67 billion during the first half of the current fiscal year, which was $4.40 billion in the same period of last year.
The government has set a target of receiving foreign assistance worth $12.38 billion for the current fiscal year.
ERD officials said that many ministries and divisions were yet to submit preliminary development proposals for different projects, which is leading to the delay in receiving the loan pledges.
For example, the official cited a total $2 billion flexible loan by the World Bank to five projects.
Though the lender has approved the loan in its board, the government agencies could not table the projects before the Executive Committee of the National Economic Council (ECNEC) - pushing back the loan signing.
The official noted that the same inefficiencies and negligence in other projects plague the foreign assistance.
He also attributed discontinuation of vaccination support by foreign development partners this year to the plummeting aid commitment and disbursement.
So far, Bangladesh has received $250 million in budget support from the Asian Infrastructure Investment Bank (AIIB). The country has received the highest $383.25 million aid commitments from the ADB, following the second highest of $300 million by the World Bank.
According to ERD data, Japan released the largest chunk of foreign aid for Bangladesh in July-December. The island nation freed $921.61 million to Bangladesh, followed by $567.34 million by the ADB.
Of the key donors, the World Bank released $540.37 million, China $535 million and Russia $439.81 million to Bangladesh in the first half of FY23.
In the FY23 national budget, the government had originally proposed to spend Tk 93,000 crore from foreign aid allocation. The figure has been proposed to be reduced to Tk 78,000 crore in the revised development spending plan.