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Net foreign assistance to Bangladesh falls

Foreign aid and development partners (donors) have played a significant role in the development story of Bangladesh. The Coronavirus epidemic hit the flow of aid to foreign donors who cleared 14 percent less in February, compared with the same period last year.

Figure: In 2020, the amount of promised foreign aid during the July-February period decreased almost half year over year.

Fatima Yasmin, Secretary of the Department of Economic Relations, said that the epidemic began to hit Bangladesh’s development work in January, particularly by experts from China and several other countries.

“It has impacted foreign funds’ remittances,” she said before expressing hope that the situation would return to normal by the end of the year, and by clearing and promising foreign donor funds as expected.

After the Rana Plaza incident, JICA (Japan International Cooperation Agency) has given 100 crore financial aid and Technical Support for Building Safety in the RMG Sector. The secretary said Japan will clear a huge amount of funds soon, or that JICA expects it. She added, “If we get funding, everything will be fine.”

ADB (Asian Development Bank) and EBL (Eastern Bank Limited) signed a $20 million deal to support the RMG sector in 2018. ADB’s Technical Assistance (TA) 4320 Bangladesh Social Protection for Poor Female Workers in the Garment Sector in the Context of Changing Trade. The Asian Development Bank (ADB) on Saturday approved a $300,000 emergency grant to support the Bangladesh government’s fight against the coronavirus (COVID-19) pandemic.

Fatima Yasmin also said that the Asian Development Bank cleared some funds on March 24, but they were not added to the account. “So, we expect to see a positive change next month,” Fatima Yasmin said.

Foreign donors cleared more than $ 3.48 billion during the July-February period of the current fiscal year. The same amount was $ 4.08 billion last fiscal year.

The government initially set foreign fundraising targets of Tk 718 billion cleared by donors, but in mid-March, the situation of the epidemic continued to deteriorate and it was revised down to Tk 620 billion at the National Economic Council meeting.

The foreign donors pledged over TK  27327 crore in this period against Tk 51880 crore the same period last fiscal year.

Table: Net foreign assistance of Bangladesh.
Year Figures in core TK
2011 10000
2012 11860
2013 17190
2014 16050
2015 21580
2016 25000
2017 12304
2018 46024
2019 54067
2020 27327

Net foreign assistance (gross inflows of grants and loans, net of repayments) have continue to rise gradually over the years, except for an uncharacteristic dip in utilization in 2016-17, possibly as a result of the terrorist attack in Dhaka on July 1 in 2016.

Now in 2020, the amount of promise they made during the July-February period decreased almost half year over year. The government had to repay ten percent more than the amount owed to the government during the same period last fiscal.

In the first eight months of this fiscal, the government paid $ 1.1 billion in debt and interest. The payout for this period last fiscal year was $990 million.

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