Thursday, 18 August, 2022

Bangladesh fetches record $7.71bn dev assistance in 10 months

Bangladesh has fetched a record $7.71 billion in foreign funds in the first 10 months due to an overwhelming response from the development partners for Covid-19 emergencies and other needs.

This was the highest-ever official development assistance (ODA) Bangladesh has received for any whole year, according to the latest data released by Economic Relations Division (ERD).   

In the 2021-22 fiscal year, the country witnessed a total external resource inflow of $7.1 billion. The previous highest receipt was $7.38 billion in 2019-20 fiscal year.

The July-April period’s foreign fund release was 59 percent higher than $4.86 billion released in the first 10 months of FY21. It was 4.5 percent higher than the FY20’s inflow of $7.38 billion.

Quick release of budget support to help address the pandemic played a key role, ERD officials and economic analysts said.

“The jump in foreign fund inflow was mainly caused by better-than-expected financial support from the World Bank, ADB and other development partners to help the country recoup the losses caused by the pandemic,” commented Ahsan H Mansur, head of Policy Research Institute (PRI).

However, the economic analyst thinks that the release of budget support was much higher than that of the project fund.    

In the context of slowing revenue collection during the pandemic, the government has emphasized getting budget support from the development partners to offset the resource constraints, he explained.

Unlike the project assistance, the government can use budget support for any area, but such support is tagged with some conditions for economic reforms.

Finance Minister AHM Mustafa Kamal has also admitted that they have received a response from the development partners even better than their expectations.

As a result, the government is not facing any financial crunch in meeting vaccine-related costs and other expenses, Kamal has said.  

Besides, new fund commitments from the development partners also modestly increased to $5.88 billion from nearly $5.28 billion in new funds committed during the period in FY21. The disbursed amount includes $7.52 billion loans and $188.5 million in grants.

An analysis of ERD data showed that Asian Development Bank (ADB) released the highest $1,986.5 million funds, while Japan International Cooperation Agency (Jica) released $1,705 million and the World Bank $1,159.2 million.

Russia disbursed $1,054.8 million loans against the Rooppur nuclear power plant, China $794.6 million, Asian Infrastructure Investment Bank (AIIB) $290 million, India $200 million and other agencies $518.6 million.

Out of the newly committed funds, the World Bank committed the highest $1,165 million, while China committed the second-highest amount of $1,120 billion.

ADB has so far committed $1,110 million in new funds in the current fiscal year, AIIB $710 million and Japan $530 million, suggest ERD data.

The government had been struggling with raising the fund disbursement beyond the $3 billion mark before 2017-18 fiscal year when it jumped to $6.37 billion. In the following year, the country got $6.54 billion fund released.

Meanwhile, the fund repayment burden increased as well in the first 10 months. Repayment of loans and interest surged by 9.22 percent to $1,751.8 million from $1,603.9 million last fiscal year.