Bangladesh witnessed a jump in foreign aid disbursement – up by 57.9% year-on-year – in the first eight months of the current fiscal (FY2021-22), riding mainly on the pandemic-related budget assistance and loans for purchasing Covid-19 vaccines.
In the July-February period, foreign development partners released $5.9 billion, which was just $3.7 billion in the corresponding period of the previous fiscal (FY2020-21), according to the latest report of the Economic Relations Division (ERD).
ERD officials said despite the surge in aid, ministries and agencies concerned failed to increase their capacity to implement development projects, which was why the government cut the budgetary allocation of foreign funds in the Revised Annual Development Programme (RADP).
The allocation decreased by Tk17,774 crore from the Tk88,024 crore.
Economists fear the foreign fund disbursement might drop in the next months of the fiscal owing to the slow implementation of some large infrastructural development projects thanks to the Russian-Ukraine war that began in late February. However, the full-swing implementation of other projects can change the game.
"We have huge shortcomings in utilising foreign aid in development projects. This time the fund disbursement increased due mainly to Covid-related financing" said Policy Research Institute Executive Director Ahsan H Mansur.
"It is true that the Russia-Ukraine war hikes the price of construction materials. However, project implementation with proper strategies can increase the release of the foreign funds," he told The Business Standard.
Of the disbursed $5.9 billion, Asian Development Bank released the highest $1.8 billion, followed by Japan's $1.3 billion, World Bank's $711 million and Russia's $701 million. Besides, China provided Bangladesh with $497 million during this period.
Apart from the fund disbursement, the country received foreign aid commitment of $4.8 billion, up by 22.26% year-on-year, in the July-February period, the ERD report said. It was $3.9 billion last year.
Of the amount, China will provide $1.1 billion, Asian Development Bank $822 million, World Bank $795 million, Asian Infrastructure Investment Bank $515 million and Japan will give $380 million. China's committed investment is the highest as it would finance the Dhaka-Ashulia Elevated Expressway project.
Former lead economist at the World Bank in Dhaka Zahid Hussain believes the aid commitment would increase in future as Bangladesh's economy is performing well.
"The Russia-Ukraine war will not have significant impacts on foreign fund commitments," he told TBS.
Meanwhile, the government spent $1.3 billion in repaying foreign loans in the first eight months of the fiscal year, which was $1.2 billion last year.