In the past three fiscal years through 2021-22, Bangladesh's development partners have released $5.83 billion – 76% of the target – in budget support and vaccine procurement to help the economy steer out of the pandemic-induced doldrums.
Bangladesh had a target of coming by $7.697 billion from its development partners to deal with Covid blues, according to the latest report of the Economic Relations Division (ERD).
The government will receive the remaining segment of the target – $1.86 billion –in the current fiscal year.
ERD officials said Bangladesh had sought support for financing the budget deficit from various development partners, such as the World Bank, Asian Development Bank (ADB), and the Japan International Development Cooperation Agency (Jica).
In addition, bilateral development agencies also came forward. The government has succeeded in reviving the Covid-stricken economy with budgetary support from development partners, the officials added.
The government now plans to seek budgetary support from the development partners in order to deal with the economic shock caused by the Russia-Ukraine war.
As part of this, the government is in discussions with various multilateral development agencies, notably the International Monetary Fund (IMF), the World Bank and the ADB.
According to ERD data, the government has already got $4.5 billion released in budgetary support and $1.3 billion for vaccine procurement from development partners in the last three years. The government expects the rest of the amount out of the $2.07 billion target for vaccine purchase to be released in the current fiscal year.
In fiscal 2019-20, the World Bank, ADB and IMF released $1.7 billion in budget support, according to officials at ERD.
The country's bilateral development partners came forward in the next fiscal year by releasing $1.09 billion for vaccine procurement and budget support.
Bangladesh has received an all-time high budget support of $3 billion in fiscal 2021-22.
Among development partners, the highest amount of assistance came from the ADB at $2.48 billion. Besides, the World Bank disbursed $1.5 billion and $1.15 billion came from the Asian Infrastructure Investment Bank (AIIB).
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said the budget support has massively helped the economy to recover from the Covid-19 shock.
"Our revenue generation is low. Because of this, budget support was required from development partners. This budget support has been helpful for the foreign currency reserves in the current economic situation because after agreements, the money is added to the reserves," he added.
"As in the pandemic, we also need budget support for the current turbulent economic situation triggered by the Russia-Ukraine conflict. Moreover, the size of our budget deficit in the current financial year is also large. This is why foreign aid is needed. But collecting this support will be challenging for us," said the noted economist.
People concerned said the government expects budget support from development partners to steer the economy out of the difficulties caused by the Ukraine war in the same way it received such support for financing the budget deficit during the pandemic.
ERD officials said that the government expects an additional $1.5 billion from the World Bank to deal with the current economic situation.
Meanwhile, the government wrote to the World Bank last June asking for $1 billion in budget support to deal with the fuel and food price inflation caused by the Ukraine-Russia war.
In addition, discussions on budget support for green growth have been initiated with the multilateral lender. Green growth budget support could range from $250 million to $500 million, ERD officials said.
ERD officials said the government has recently sought another $1 billion of budget support from ADB.
In the current global situation, talks with the IMF for $4.5 billion have already started. Once everything is finalised, the Washington-based lender will give $1.5 billion per fiscal year over the next three years.
Bangladesh is expected to receive $250 million in budgetary support from the AIIB in the current fiscal year as well.
ERD officials said assistance may be sought from bilateral organisations in addition to multilateral development partners.
In its letter to various development partners, the government said the ongoing Russia-Ukraine conflict has brought about new challenges. The unprecedented price hike in energy, food and essential commodities and the widespread disruption in the international supply chain have adversely affected the global economy, including Bangladesh.
The conflict has been threatening to emerge as an obstacle in the way of achieving full economic recovery and targeted development goals, it added.
"Therefore, the government urgently needs additional budget support for providing stimulus to the industries, businesses, SMEs and social protection programs at the critical time. Furthermore, additional fiscal space is also needed to accommodate the higher fuel energy and food prices," read the letter.