Amidst a lot of criticism regarding seeking a $4.5 billion loan from IMF (International Monetary Fund), the Economic Relations Division (ERD) of the Finance Ministry statistics disclosed that the government of Bangladesh has set a new record in taking aid and loans from development partners and donor countries in FY22.
In terms of financing, the Asian Development Bank (ADB) topped the list, followed by Japan and the World Bank, according to a report published by the ERD on July 27.
Development partners and donor countries have released more than $10 billion in loans and aid to Bangladesh in 2021-22, a record for a financial year in the country’s history.
Analyzing the ERD data shows that in FY22, more than $9.81 billion came as a loan and the rest is various kinds of aid.
Bangladesh brought in the funds for development projects, which is 26% more than the preceding fiscal year.
Development partners and countries gave loans and aid worth $7.96 billion to Bangladesh in FY21, which was $7.27 billion in FY20.
According to the ERD report, ADB funded $2.56 billion, Japan $2.21 billion and the World Bank Group’s International Development Association (IDA) $1.67 billion last fiscal year.
Russia on the other hand, delivered $1.22 billion in funds solely for the construction of the Rooppur Nuclear Power Plant Project, while the Chinese government provided $1 billion for different projects.
India contributed $324.1 million and the Asian Infrastructure Investment Bank (AIIB) gave $300 million.
Other agencies and countries funded $709.1 million combined.
Bangladesh paid up $2.01 billion in dues last financial year, which is almost $100 million more than the previous year. It was 1.91 billion dollars in FY21.
A top ERD official seeking anonymity said that a significant amount of last year’s overseas finances was for supporting the national budget as Bangladesh had agreements with the World Bank and ADB to keep the country’s economy stable during the Covid-19 crisis.
Finances from these two organizations accumulated huge foreign funding at the end of the year, the official added.
After asking about the reason behind this significant jump in foreign loans and aid Mostafizur Rahman, additional secretary, Foreign Aid Budget and Accounts (FABA) of ERD said that the development partners have released a significant amount of money in view of Covid-19. Besides, exemptions have increased for major development projects. A lot of other projects also got good money and foreign loans and aid have increased due to various reasons.”
“This is a positive aspect for the country in the ongoing global economic crisis,” he added.
Economic Relations Secretary Sharifa Khan said: “Progress in the ongoing projects, those financed by foreign sources in particular, drastically gained pace in the last financial year with the Covid crisis abating.”
“As the funds tied to those projects began swelling, we were able to reach the $10 billion milestone.”
The funds received from foreign sources surpassed the target by almost $1.8 billion.
However, in FY22 the commitment of development partners decreased.
A little over $8.2 billion in loans and aid was pledged last fiscal year, which was $9.44 billion in FY21.
However, every year the Bangladesh government borrows money from internal, external, domestic and foreign sources to meet the budget deficit.
Domestic or internal borrowing is mainly from banks and savings certificates. On the other hand, the government’s external borrowings come from foreign sources from multilateral and bilateral development partners and donor countries.
Foreign development partners and countries also provide some aid to Bangladesh.