Govt exploring options to mobilise more foreign aid  

The government is exploring the options to mobilise greater volume of external aid, up to 3.0 per cent of Gross Domestic Product (GDP), to help meet the additional resources needed for developing infrastructure and cutting poverty, officials said Thursday.

Presently, utilisation of the overseas financial support is estimated at nearly 2.0 per cent of the GDP.

Development analysts, however, said it is difficult to raise the external aid inflow as the government’s development agencies have been inefficient in using loans and grants available in the pipeline.

foreign aidMinistry of Finance (MoF) officials said they are exploring ways to mobilise an increased volume of external loans to help improve country’s infrastructure and cut poverty, reports the Financial Express (FE).

“We are analysing impact of the higher borrowing from the existing level on the national economy. If we find it viable, we will go for taking more loans and grants from foreign sources,” said a senior MoF official.

Bangladesh is one of the poorer countries in the world, which receives external grants and loans, equivalent to the extent of nearly 2.0 per cent of its GDP.

Development analyst Dr Mirza Azizul Islam said: “The government agencies are so inefficient that it will be difficult for the government to boost foreign aid inflow.”

“A total of US$16.62 billion confirmed foreign aid remains unutilised. The amount is equivalent to the aid disbursed during past eight years, he said. How will the government agencies utilise more assistance with the existing set-up?” Dr Islam wanted to know.

“It’s better for the government to boost first its capacity to utilise the aid in the pipeline and then it could go for more borrowing of concessional loans,” Mr Aziz told the FE.

A senior Economic Relations Division (ERD) official said since Bangladesh’s economy has been expanding and it has still scope to take soft loans from the donors, the government can borrow more loans from the foreign sources. “We have already analysed Bangladesh’s debt sustainability. We have found that Bangladesh can take more loans than the present portfolio,” he told the FE.

Now we are analysing details in the light of the country’s macro-economic indicators for finding out its impact on the overall national economy, he added.

The official said in the analysis we would also try to find out whether Bangladesh should also go for non-concessional loans from the external sources. In the current financial year (FY) 2013-14, the government has set its annual foreign aid target at $2.95 billion cutting its earlier target of $3.30 billion. It has received total $1.83 billion aid during nine months (July-February) of the current fiscal.

Bangladesh in the last FY2013 had received $2.78 billion assistance from all the multilateral and bilateral donors, which is nearly 2.15 per cent of the country’s total $128.77 billion GDP, ERD statistics showed.

In the previous FY2012, bilateral and multilateral donors have disbursed $2.13 billion assistance through the government channel, 1.8 per cent of total GDP, ERD data showed.

Member of the General Economics Division (GED) Professor Shamsul Alam said since Bangladesh’s capacity of spending the public money has been boosted, the country could increase taking foreign loans and grant for improving its infrastructure.

“Yet, I would support spending nearly $16 billion confirmed external assistance, which is in the pipeline for disbursement against different projects by multilateral and bilateral donors, he told the FE


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