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Foreign fund release drops in August

  • Staff Correspondent
  • 26 September, 2022 12:00 AM
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Foreign fund release drops in August

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Foreign fund release by development partners declined in first two months even after showing a healthy growth in July, the first month of FY23.

Disbursement of project assistance (PA) dropped by 24.38 percent to $864.3 million in July and August, according to latest data of Economic Relations Division (ERD).

During the same period in 2021-22 fiscal year, multilateral and bilateral lenders released a total of $1,142.9 million.

The current fiscal year started with a big jump in foreign funds inflow as Bangladesh received more than $490 million in July with 48.50 percent year-on-year increase.

But the rising trend witnessed a hiccup in the following month. PA receipt slipped by 23 percent in a month to $376.3 million in August. 

Commitment for new funds, on the other hand, has increased three folds in the period to $304.92 million compared to $73.32 million funds committed in the first two months of FY22.

Bangladesh received a record $10 billion official development assistance (ODA) in 2021-22 fiscal year, propelled by a plenty of budget support from the overseas lenders to fight corona pandemic and facilitate corona recovery.

“The country received higher-than-expected loan support from ADB, the World Bank and agencies and donor countries in last two fiscal to help recoup corona losses.  

But now the Covid loans are coming down,” said economic analyst Dr Ahsan H Mansur while explaining the declining trend.

“As a result, the flow of foreign loans is falling. I think total fund release in the current fiscal will be much lower than that of the last fiscal year,” he added.

He also suggested taking foreign loans very cautiously at this moment as Bangladesh’s total foreign loans have reached as high as $95 billion.

He added that most of these loans Bangladesh has taken Tk 84 or Tk 85 Taka-US dollar exchange rate, but new loans can overburden the state coffer because dollar price has gone up to Tk 108 to Tk 110.

The first two months released funds include $832.9 million project loans and $31.4 million grants, ERD data showed.

Japan disbursed the highest amount of $329.1 million during the months of July and August. China released $187.2 million, Asian Development Bank $136.9 million, the World Bank $94.1 million, India $71.9 million, Russia $4.1 million and AIIB $1.7 million.

Meanwhile, the government has repaid nearly $289.8 million loans and interests in July-August, lower than $298.22 million loans and interests repaid during the same period a year earlier.