$2.0b budgetary support likely this fiscal year
Higher external assistance necessary to overcome pandemic-driven crisis
The government is working on securing about $2.0 billion budgetary support from bilateral and multilateral development partners in the current fiscal year (FY), finance ministry officials said.
In the just-concluded fiscal year, Bangladesh got $1.0 billion as budgetary support to help the economy tide over the crisis created by the covid pandemic.
The country, in the meanwhile, received $732 million from the International Monetary Fund or IMF as emergency assistance to meet the balance of payments and budget needs.
"We are in talks with different partners on the budgetary support as the pandemic has destabilised the economy," a senior finance division official told the FE.
He said the pandemic started posing threat to the economy in the final quarter of the last fiscal year and it is still far from over.
"The revenue collection was the worst in the last fiscal year and there is no sign that it will turn around soon. So, we will need increased budgetary support this fiscal," said the official.
In the current fiscal, according to the official, the World Bank may provide some $500 million, the Asian Development Bank $500 million, the Japan International Cooperation Agency $300 million and Asian Infrastructure Investment Bank, or AIIB $300 million.
At the same time the government is expecting $90 million from the European Union, $50 million from South Korean Economic Development Cooperation Fund, $50 million from French Development Agency, and $30 million from Germany, according to officials.
In the last fiscal year, the Asian Development Bank gave $500 million, the World Bank $250 million, and the AIIB, $250 million as budgetary support.
Another senior finance ministry official told the FF in the last fiscal year, remittance inflow was much higher than the expectation, despite the economic devastation around the world during the third quarter worldwide.
But the situation has yet to improve, especially, in the Gulf region, the main source of Bangladesh for remittance earnings, where people could not start working.
Bangladeshi workers are passing idle time there and many have already lost jobs and huge job cut is feared there, which may halve remittance inflow in the coming months, he expressed the fear.
He also said in the fourth quarter of the last fiscal year, when the virus started spreading across the country, the import of goods almost fell down to zero.
"But now the import will see a significant boost. Even we may need to import rice this year. So, a significant pressure on foreign currency reserves is imminent," he said.
Executive director of the Policy Research Institute Dr Ahsan H Mansur told the FE on Monday the budgetary support is very essential now to finance the gap, which is estimated at nearly Tk 900 billion.
"But getting the support depends much on what policy steps the government takes and how the donors are persuaded," he said.