In the first two months of the current fiscal year (July and August), Bangladesh received a total of $864.29 million in foreign loan assistance from various donor countries and organizations.
The amount is 24.38% lower than the same period of FY22 when the amount of disbursed loans was worth $1.14 billion.
But on the other hand, Bangladesh secured new commitments amounting to nearly $304.92 million from only two development partners – the World Bank and the United Nations.
According to the latest report of the Economic Relations Division (ERD) which was published on September 22, Washington-based multilateral lenders alone committed $300 million as a loan, while the UN pledged around $4.92 million as grant.
In the first two months of FY22, the commitments stood at $73.32 million.
Analyzing ERD data, it can be seen that FY23 started with a jump in foreign debt flow in continuation of the previous fiscal year.
In July, the first month of the new fiscal year, nearly $490 million in foreign debt came in, which was 48.50% more year-on-year (YOY).
But in August, donors disbursed $37.63 million in debt which is about 23% less than the previous month of July.
Explaining the reason for the sudden drop in foreign debt, Economist Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh (PRI), said: “More than expected loan assistance was received from the World Bank, ADB and various donor countries and organizations to compensate for the damage caused by the Covid-19 pandemic that has been going on for more than two years.
“But now no more Covid-19 loans are available. Also, others are borrowing less than before amid volatile global conditions and that is why foreign debt is decreasing. I think, this time the loan will be a little less than last time.”
“We have to take loans carefully in these difficult times. Have to avoid taking loans other than low-interest loans because our foreign debt has now reached $95 billion. We got this loan at 84/85 per dollar. Now the dollar rate is Tk108-Tk110. If the dollar market is not normal and if the prices don’t decrease, this debt will become a burden,” he also warns.
Japan
In July-August of the current FY23, Japan has given the highest amount, $329.1 million.
The second highest $187.19 million was received from China.
Asian Development Bank (ADB) disbursed $135.92 million during this period, which is the third highest.
The World Bank released $94.13 million and India gave $71.89 million.
In addition, $4.1 million were received from Russia and the Asian Infrastructure Investment Bank (AIIB) released $1.7 million.
FY23 Target
The government has set a target to get $12 billion in foreign assistance released in the current fiscal year.
In FY22, foreign aid disbursements reached a record $10 billion, thanks to the fast utilization of external loans in some megaprojects that are nearing completion, more budget support from development lenders and funds for Covid-19 vaccines.
Besides, it has targeted $6.2 billion in new commitments for this fiscal year, down from $8.18 billion in FY22.
