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BD Aid inflow crosses $7b-mark for 2nd year

bluesky

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Aid inflow crosses $7b-mark for 2nd year
FHM Humayan Kabir | Published: July 27, 2021 12:01:19 | Updated: July 27, 2021 13:21:30
Evaly and Fianancial Express Desktop
Aid inflow crosses $7b-mark for 2nd year



Bangladesh received US$7.11 billion worth of foreign aid in the last fiscal year (FY) of 2020-21 despite hurdles in execution of the foreign-funded projects amid the Covid-19 pandemic.
The foreign assistance inflow has again placed Bangladesh into the seven-billion-dollar club for the second consecutive year, officials said on Monday.
However, the medium- to long-term (MLT) foreign assistance received in the last fiscal (FY2021), from July 2020 to June 2021, was slightly lower compared to the FY2020.

In FY2020, the external development partners disbursed $7.27 billion worth of assistance for the Bangladesh government, showed the Economic Relations Division (ERD) data.
The ERD latest provisional data, received by the FE on Monday, showed that foreign development partners made a commitment of $9.35 billion worth of MLT loans and grants for FY2021 - $205 million lower than that in the previous FY2020.
In FY2020, they confirmed $9.55 billion worth of foreign assistance for Bangladesh's development work, ERD data showed.
An additional secretary of the ERD, who did not wish to be named, told the FE that some budget support and better performance of the project implementing agencies in executing the foreign-aided projects had facilitated the satisfactory aid flow to Bangladesh even during the Covid pandemic.
"Our strict monitoring on project implementation by different public agencies has also brought a good result for the foreign aid inflow," he added.
Although the inflow of the foreign assistance was slightly down in FY2021 from that in FY2020 and a billion dollars lower than their annual target, the ERD official said, they were still satisfied with the received amount.
The government had set a target to receive an $8.32 billion worth of foreign aid in the outgoing FY2021.
Implementation Monitoring and Evaluation Division (IMED) Secretary Pradip Ranjan Chakraborty said the government, especially the ECNEC Chairperson Prime Minister Sheikh Hasina, had given different directives time-to-time to the ministries during the ECNEC meetings for speeding up quality project execution which brought a good result.
"Gathering knowledge of the impact of coronavirus in project execution in the past, the agencies had utilised their experiences properly in the recent months amid Covid pandemic. It's really an achievement for Bangladesh," he told the FE.
Out of the total $7.11 billion disbursed assistance in the last FY2021, the foreign development partners, including the World Bank, Asian Development Bank and Japan, released $6.77 billion worth of MLT loans and $334.23 million grants, showed the ERD's provisional data.
In FY2020, the external partners disbursed $6.99 billion worth of MLT loans and $275.73 million in grants.
Out of the total $9.35 billion worth of aid commitment in the just concluded FY2021, the development partners confirmed $8.67 billion worth of loans and $673.61 million grants.
In FY2020, they made a commitment worth $9.05 billion in loans and $502.28 million in grants for disbursement against different development projects and programmes in Bangladesh, the ERD data showed.
Aid commitment means the confirmation of loans or grants by the donors against any projects or programmes through signing deals with the government. And the disbursement means release of the committed loans and grants following the agreements.
When asked, another senior ERD official told the FE that as some budget supports, programme loans by the WB, ADB and Japan had been released and project implementing agencies utilised foreign aid in time, total amount of assistance had crossed the seven-billion-dollar mark in FY2021, like the previous FY2020.
Besides, some big loans including the ADB's $500 million for Covid preparedness, the WB's $1.0 billion for vaccine procurement and job creation, and Japan's $320 million budgetary support were signed during the last fiscal, he said.
As a result, the overall foreign aid commitment was in a comfortable zone, he added.
According to the IMED, the government agencies utilised foreign aid at a much higher rate than the local funds in the Annual Development Programme (ADP) during July-May period of the last fiscal.
They utilised 63 per cent of the Tk 630 billion project aid (foreign aid) allocations and 59 per cent of Tk 1.35 trillion local fund allocations in the last fiscal ADP.
The foreign development partners used to release their committed funds against different public sector projects and programmes in Bangladesh every year.
Meanwhile, the government made payments worth $1.91 billion funds during July-June period of the last FY2021, against the total outstanding MLT loans, the ERD data showed.
Out of the $1.91 billion debt servicing, the government repaid interest worth $496.06 million and principal worth $1.41 billion.
The debt servicing in FY2020 was $1.72 billion.
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mb444

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These are not aid...they are loans, if you have to pay it back its not aid..our idiotic journalist needs to understand the difference.

The countries that provide "aid" does it to gain market access and political leverage. Nothing is free and these are not aids...
 

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Meanwhile, the government made payments worth $1.91 billion funds during July-June period of the last FY2021, against the total outstanding MLT loans, the ERD data showed.

Out of the $1.91 billion debt servicing, the government repaid interest worth $496.06 million and principal worth $1.41 billion.

The debt servicing in FY2020 was $1.72 billion.
The govt borrowing is over $6.5 billion in 2020 and the debt servicing was $1.91 billion in the same year.

It means that the govt borrowed a net ($6.5 billion - $1.91 billion) = $4.59 billion year in 2020.

No doubt, BD is developing very fast with so much money to service the debts. The coming years will see the doubling of servicing at the tune of $4.0 billion or more without a doubt because much of the loan money will be matured by that time.

A day is coming soon when BD's yearly repayment amount will be the same that it will be borrowing.

What a fictitious development strategy!!!
 

mb444

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The govt borrowing is over $6.5 billion in 2020 and the debt servicing was $1.91 billion in the same year.

It means that the govt borrowed a net ($6.5 billion - $1.91 billion) = $4.59 billion year in 2020.

No doubt, BD is developing very fast with so much money to service the debts. The coming years will see the doubling of servicing at the tune of $4.0 billion or more without a doubt because much of the loan money will be matured by that time.

A day is coming soon when BD's yearly repayment amount will be the same that it will be borrowing.

What a fictitious development strategy!!!
Bangladesh is one of the least endebted countries. However it is a worry. BD needs to increase tax collection to solve this issue.

All this borrowing is based on continued economic growth but shocks can happen. Only good thing is BD borrows for capital investment not for current account financing so realistically capital investment will give a return by generating economic growth.
 

UKBengali

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Bangladesh is one of the least endebted countries. However it is a worry. BD needs to increase tax collection to solve this issue.

All this borrowing is based on continued economic growth but shocks can happen. Only good thing is BD borrows for capital investment not for current account financing so realistically capital investment will give a return by generating economic growth.
I do not think it is a real issue as tax collection growth is keeping up with increased debt repayments.

A lot of very expensive infrastructure projects like the power stations have already been “baked” into the debt figures and the debt as proportion of GDP is likely to slowly go down as this decade progresses.

BD could of course do better than it is doing, still better than average for the region.
 
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bluesky

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Bangladesh is one of the least endebted countries. However it is a worry. BD needs to increase tax collection to solve this issue.

All this borrowing is based on continued economic growth but shocks can happen. Only good thing is BD borrows for capital investment not for current account financing so realistically capital investment will give a return by generating economic growth.
All the countries of today's developed or developing world have developed by their own efforts and own manpower. Please tell me which country has developed just because IMF, WB, ADB or others have extended loans to it.

Rather, they developed when these international money sharks did not exist. But, we think BD can develop with their money and without our own participation.

People of a nation create new wealth when they are made to work systematically to accomplish a project successfully. The GoB does not want to develop that way. It wants foreign money to do the trick just like another country in India's west.

Creating a proper administration system to collect taxes is part of the good governance of a country. We have failed miserably there. But, even if we have a proper amount of tax money, the country will remain unable to implement a little difficult project because the govt has completely failed to nurture any design consultant companies in the country.

Many London consulting firms regularly are requested to do the jobs.
 
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mb444

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I do not think it is a real issue as tax collection growth is keeping up with increased debt repayments.

A lot of very expensive infrastructure projects like the power stations have already been “baked” into the debt figures and the debt as proportion of GDP is likely to slowly go down as this decade progresses.

BD could of course do better than it is doing better than average for the region.

Our tax collection is one of the lowest in the world. From a market capitalist perspective small government is great but our tax collection is too low to adequately set up infastructure and create a welfare system for the people.
 

mb444

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All the countries of today's developed or developing world have developed by their own efforts and own manpower. Please tell me which country has developed just because IMF, WB, ADB or others have extended loans to it.

Rather, they developed when these international money sharks did not exist. But, we think BD can develop with their money and without our own participation.

People of a nation create new wealth when they are made to work systematically to accomplish a project successfully. The GoB does not want to develop that way. It wants foreign money to do the trick just like another country in India's west.

Creating a proper administration system to collect taxes is part of the good governance of a country. We have failed miserably there. But, even if we have a proper amount of tax money, the country will remain unable to implement a little difficult project because the govt has completely failed to nurture any design consultant companies in the country.

Many London consulting firms regularly are requested to do the jobs.
Europe rebuilt post ww2 via the marshal plan. Japan raised from the dead by US, same for china and entire east asia.

Multilateral lenders are newer development but does the same thing. Everyone needs a helping hand. You are correct that one needs to work hard for success but without capital and opportunity no amount of talent or hard word will make a difference.

UK payed off marshal plan loans in 2006 or something like that.
 

UKBengali

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Our tax collection is one of the lowest in the world. From a market capitalist perspective small government is great but our tax collection is too low to adequately set up infastructure and create a welfare system for the people.
True but BD spends a low amount as percentage of GDP in line with the low GDP tax collection.

We will hopefully see a significant ramp-up in the GDP tax collection ratio as otherwise BD would end up like Indonesia.
 

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