Major bilateral financiers tight-fisted on dev funding

Foreign development funding seemed falling as three major financiers made no aid commitment in the last fiscal under the past government, leaving their-aided projects in slow lane.

Officials said Saturday China, India and Russia didn't make any aid commitment in the fiscal year (FY) 2023-24, although they are involved with some megaprojects in Bangladesh.

However, the traditional multilateral development partners have continued their financial support to Bangladesh government, official statistics showed.

Analysts say hard terms and conditions set by the bilateral lenders and slow progress of some of the ongoing projects have impacted funding from them.

Project implementers and planners in the government say the projects, especially the Indian Line of Credit (LoC)-funded projects and Chinese schemes, are going slow.

Ministry of Finance (MoF) officials have said the government was cautious on getting further aid commitment from the three major lenders due to their harder terms and conditions binding the loan packages.

"Among the key bilateral development partners, interestingly, China did not make commitment of a single penny of foreign aid in the last FY," said one official.

In the previous FY2023, the aid commitment from Beijing was also very poor as it confirmed only US$276.25 million worth of aid.

In the FY2021, China made the largest commitment of $1.126 billion worth of funds, for constructing the Dhaka-Ashulia elevated expressway.

"We have been requesting China for providing funds for our priority projects over the last few years. We sent 27 projects to Beijing for the funding. But the lender has been  going forward slowly in terms of fund commitment. It had not made any fresh aid commitment to Bangladesh last fiscal," said a senior ERD official.

"We are still trying to get confirmation of loans to some 3-4 priority projects over the last couple of years from Beijing," he added.

India, which emerged as one of the major bilateral donors to Bangladesh in 2010 with its aid commitment of $1.0-billion LoC, has not extended any fresh assistance for Bangladesh over the last seven years.

Delhi confirmed $4.5 billion worth of LoC-II in 2016 and $2.0 billion LoC-III in 2017.

After the LoC-III offered in 2017, the Indian government has made no fresh fund commitment for Bangladesh.

Meanwhile, India has cut back on Bangladesh aid allocations by 40 per cent in sync with its newly announced national budget for the fiscal year (FY) 2024-25 as it has trimmed down its overall allocations.

Bangladesh will receive maximum INR 1.20 billion in the current fiscal in a fall from INR 2.0 billion in the outgoing FY2023-24, media reports said.

An ERD official said although they had demands of financial assistance from India and other bilateral development partners for the development of Bangladesh, they had not made any fresh commitment over the last few years.

Meanwhile, India disbursed $297.95 million in the last FY2024, much lower than the $337.046 million worth of loans in the FY2023, ERD data showed.

According to the ERD, Russia did not make any fresh aid commitment in the last FY2024. It had confirmed $11.38 billion in FY2017 for constructing the Rooppur nuke power plant.

Moscow further had not made any fresh aid commitment to Bangladesh government.

Moscow usually would provide foreign assistance to Bangladesh for reconstruction in the post-liberation period, which has been disrupted over the last two decades except for 2-3 aid confirmation, ERD officials said.

A senior Bangladesh Railway (BR) official said the terms and conditions from China and India are very hard.

"We have to select contractors and procure almost all the products and services from those countries, which is one of the barriers to our quality project works and in-time completion of those schemes. So, loans from the multilateral donors are comparatively concessional and less conditional," he said, requesting anonymity.

Meanwhile, among the multilateral donors, the World Bank made a commitment of 2.618 billion worth of funds, while the Asian Development Bank $2.94 billion, AIIB $400 million.

Among the bilateral donors, only Japan stands out as an exception-it made a commitment of a significant amount $2.04 billion worth of aid for Bangladesh in the last fiscal.

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