Foreign aid flow falling when forex much coveted

Foreign-aid inflow has been on a slide as Bangladesh received 10-percent lower assistance in the first half (H1) of the current fiscal year, officials said, when it is needed to recharge reserves.

Aid commitment more than halved while release also dropped deeply during the first six months of the fiscal year (FY) 2022-23, official statistics show.

Governmental austerity measure and tight monetary policy induced by global economic crisis affected the foreign-assistance flow both from within and without. As such, the country received US$396 million less funds in the July-December period, they said Sunday.

At the same time, the amount of aid commitment during FY23H1 compared to the same period of last FY2022 showed yet lower trend.

Economic Relations Division (ERD) officials said the development partners disbursed US$3.78 billion worth of medium- to long-term (MLT) loans and grants in Jul-Dec period this fiscal compared to $4.18 billion in the same period last fiscal.

And the development financiers made only $1.76 billion worth of aid commitment in H1 this fiscal compared to $4.40 billion in the same period last FY2022, ERD data show.

The country's major bilateral development partners, including China, India and Russia, are conspicuous by not making any commitment of foreign aid during the period under review.

Analysts think the global economic crisis and government's austerity in public spending in the development sector have led to foreign aid ebbing down, as the public agencies are being discouraged from taking up fresh projects.

"In addition, execution of many of the ongoing foreign-aided projects also slows under a blowback impact of the austerity," said one official.

Implementation Monitoring and Evaluation Division (IMED) has shown that the government ministries and agencies implemented only 23.53 per cent of the annual development programme (ADP) during the H1.

In the same period last FY2022, the public agencies had executed 24.06 per cent of the ADP.

Meanwhile, the development partners all together disbursed $3.78 billion worth of MLTs and grants during the July-December period, 9.48-percent lower year on year.

In the same period, they provided $4.18 billion worth of assistance in H1 of the last FY2022, the ERD data show.

Japan disbursed the highest amount of assistance during Jul-Dec period followed by the Asian Development Bank (ADB), the World Bank (WB), China, and Russia. Japan released $921.61 million, ADB $567.34 million, WB $540.37 million, China $535.06 million, and Russia $449.81 million.

Meanwhile, the government repaid $1.05 billion in interest and principal against the outstanding loans during the July-Dec period. In the same period last FY, the government had paid back $1.04 billion against its MLT loans.

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