Foreign loan disbursement shoots up 58pc

Foreign assistance disbursement jumped 58 per cent in the July-February period of the current fiscal year thanks to fast implementation of mega projects and increased flow of funds from international financial agencies to help Bangladesh tackle the pandemic.

This was the highest growth in foreign aid received by Bangladesh since fiscal 2017-18, when it ballooned 74 per cent year-on-year to hit $6.1 billion, according to data compiled by Bangladesh Bank.

During this July-February period, Bangladesh's development partners disbursed nearly $6 billion for the country, up from $3.7 billion in the previous fiscal year, according to data of the Economic Relations Division (ERD) released yesterday.

ERD officials say a number of mega projects funded by Japan, including the Dhaka Metro Rail project, are being implemented in in full-swing following the easing of coronavirus restrictions.

A good amount of funds was also disbursed by the World Bank to support efforts aimed at tackling the pandemic along with regular loans.

Bangladesh has set an ambitious target to receive $12.98 billion in foreign assistance from its development partners in the current fiscal year.

The country spent around $3 billion to $3.5 billion from foreign loans and grants annually from 2013-14 to 2016-17. The spending of foreign funds crossed $7 billion per year since fiscal 2018-19.

Bangladesh made debt repayments amounting to about $1,335 million in the past eight months while it was $1,187 million during the corresponding period in the previous fiscal year.

During the July-February period of fiscal 2020-21, Bangladesh received 6 per cent more foreign loans and aid with $6.9 billion compared to the same period a year ago.

Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said it appears that aid utilisation has improved during this year's July-February period.

"Perhaps the government is focusing more on foreign finance utilisation and disbursement to manage fiscal pressure," he said.

This indicates that the country's development partners have confidence in Bangladesh given its better financial position compared to some other South Asian countries, such as Sri Lanka and Pakistan, which have been struggling to get foreign loans, Moazzem added.

The commitment of development partners also increased 22 per cent year-on-year to $4.8 billion in the past eight months. When a loan agreement is signed with a development partner, it is considered a commitment, meaning the fund is ready for utilisation.

The government has set a target to realise commitments of $6 billion in foreign aid this fiscal year.

An ERD official said they have some agreements in the pipeline which would be signed within June 2022.

Once inked, the commitment of foreign aid is expected to cross the targeted figure.