Aid flow to Bangladesh rises 34pc in July-Nov

Foreign aid disbursement by development partners jumped by 34 per cent in July-November, thanks to the release of a budgetary support by Japan, officials said on Monday.

Economic Relations Division (ERD) statistics showed that the development partners, including the World Bank, the Asian Development Bank and Japan, disbursed $1.97 billion worth loans and $69.44 million in grants during the first five months of fiscal year 2020-21.

The Japanese development partner -JICA-alone disbursed $320 million budget aid earlier in the fiscal year, they added.

In the same period of FY2020, the foreign donors released loans worth $1.54 billion and grants worth $82.32 million, the ERD provisional data said.

But foreign aid commitment during the first five months of the current fiscal dipped by 26 per cent to US$1.71 billion compared with the same period last year, the provisional data showed.

The foreign lenders released US$2.05 billion worth medium-to-long-term loans and grants during July-November period, according to the ERD data. During the same period in FY2020, the disbursement totalled $1.62 billion.

A senior ERD official said the COVID 19 has affected foreign aid commitment from development partners as the global movement has decreased.

"The donors failed to send their missions to Bangladesh for completing their work, which affected the aid confirmations," he added.

According to the ERD data, out of the US$1.71 billion worth of aid commitment during Jul-Nov period, the foreign development partners signed loan deals worth $1.41 billion and grant deals worth $301.05 million with Bangladesh.

The ERD official told the FE that since the foreign aid in the pipeline is available, its disbursement would go up upon higher project execution performance by the implementing agencies under the Annual Development Programme (ADP).

According to the Implementation Monitoring and Evaluation Division (IMED), the government ministries and agencies spent 16 per cent of their foreign aid allocations, 3.0 percentage points lower than that of the internal resource outlay during July-November period.

The public bodies spent Tk 116.86 billion, 16 per cent of their total Tk 705.02 billion foreign aid (project aid) allocations in the ADP, during July-November period this FY2021.

Another senior ERD official said, "Since some big loan deals were signed in FY2020, commitment was higher compared to the same period this fiscal."

But it is good news that aid disbursement has picked up in July-Nov period this fiscal compared to the same period last FY2019.

The ERD official said, "Although commitment has been showing a downward trend in the first five months, it will pick up in the last half of the current fiscal."

Meanwhile, the government has served debt worth $746.71 million during Jul-Nov period against the total outstanding long-term loans, the ERD data showed.

The debt servicing in July-November period of FY2020 was $687.89 million, $58.82 million lower than that in the same period in the previous fiscal.

In the five months of FY2021, the government repaid interest worth $206.07 million and principal worth $540.63 million against the outstanding external debt.

"Since our borrowing has increased over the years, debt servicing is also increasing," said the senior ERD official.

"The government has taken a huge amount of buyers' credit and short-term loans over the last few years. Grace period of most of the loans was 5-6 years. So, the government has to start their debt servicing in recent years," the official said, requesting anonymity.

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