Foreign fund release soars to $3.72bn in 8 months

Staff Correspondent

5 April, 2021 12:00 AM printer

Foreign project fund release rose in the first eight months of the current fiscal year amid corona pandemic thanks to large projects’ fund inflow and budget supports committed by development partners to fight the crisis. 

Bangladesh has received a total of $3.72 billion of funds from its development partners during July-February period, suggests latest data released by Economic Relations Division (ERD).

It is 6 percent higher than $3.49 billion released during the same period one year ago even though project assistance (PA) release growth was negative until January.

“PA release has rose after eight months as development partners especially the World Bank and Jica have started releasing their committed funds,” said an ERD high official seeking not to be named.

He also hoped that the fund release will speed up further in the last quarter of FY2021.

Of the released fund, $3.61 billion was loans and $110 million was grants.

The government had set a target of mobilising Tk 705.02 billion from overseas sources including loans and grants to implement the budget, which was later curtailed to Tk 630 billion.

With the increased fund release, more than 50 percent of the target has already been achieved in eight months.

ERD officials hope that the rest of the targeted fund is likely to be released in the next four months. 

For implementing its budget, the government has to still depend on foreign money besides the local resources although PA’s share in budget is on the decline.

At present, nearly 32 percent budget money comes from overseas sources. The money is mainly used for implementing ADP while sometimes budget support also comes from the lending agencies.

The government has stepped up mobilising budget support from development partners after domestic revenues collection slipped amid Covid-19 crisis.

Bangladesh now received the highest loans from the multilateral lender the World Bank, but country wise Japan is the largest lender.

During the last eight months, the country received the highest amount of $970 million from Japan, ERD statistics suggests.

The money was released against large ongoing projects like metrorail and Matabari power plant projects, and for budget support, ERD officials informed.

Until February this year, the World Bank released $760 million, while Manila-based Asian Development Bank (ADB) released $620 million.

Russia, which is providing fund for Rooppur nuclear power plant, has so far disbursed $600 million in the current fiscal year, while another important lender China released $470 million.

Meanwhile, the government has repaid $1.19 billion loans including $870 million as principal amount and $320 million as interest.

The country’s development partners are still playing an important role in budget implementation as Tk 630 billion has been estimated to come from them to implement Tk 1.97 trillion ADP this fiscal.

“Development partners’ support is still crucial to implementing the country budget although their contribution has come down,” noted economist Dr Ahsan H Mansur said.

For lowering dependency on foreign money, he suggested increasing domestic revenue mobilization.