Fund commitment, release by donors increases

Both the foreign fund commitment and fund release by development partners have increased significantly in the first five months of the current fiscal year while the government is paying more money as the principal amount and interest of foreign funds compared to last year. 

During the July-November period of FY2021-22, the foreign fund commitment increased by 129% and fund release 49.4%, the latest data of the Economic Relations Division (ERD) showed.

The ERD report said the development partners made a commitment to provide $3.9 billion which was $1.7 billion against the corresponding period last fiscal.

On the other hand, fund release has increased for some projects as the implementation rate of those went up. 

During July-November, a total of $3.08 billion was released against $2.06 billion at the same time of last fiscal.

The government has paid 16% more to the development partners as principal amount and interest of the foreign loans. During the first five months, the government paid $868 million which was $747 million at the corresponding period last fiscal.

ERD officials said the foreign fund commitment by the development partners was less at the onset of the current fiscal year. Recently, the 42nd loan package agreement with Japan International Cooperation Agency (JICA) has been signed. This loan package includes infrastructure development funds along with budgetary support. 

Besides, a funding agreement for infrastructure projects with a large amount has been signed with China. This also has contributed to the rise of the foreign fund commitment amount.

ERD sources said development partners are making commitments for extra budgetary support for some Covid-centred projects. At the beginning of the pandemic, they made this type of commitment last fiscal. But the collection of the amount committed decreased at the end of last FY and beginning of the current fiscal. The commitment has started rising again, the source said.

Zahid Hussain, former lead economist of the World Bank Dhaka office, told TBS that the budgetary support for Covid-centred projects alongside the project assistance commitment has been increasing. Project assistance depends on the rate of implementation of the project while budgetary support is released soon after the agreement is signed, he added.