Foreign aid flow may drop on meltdown: Revised budget cuts estimation to $2.02b from $2.14b :::: The Daily Star, 15 February 2009


The revised budget for the current fiscal year estimates that the country will receive $2.02 billion aid from multilateral and bilateral donors, which is 5.6 percent less than it was projected in the original budget.

The government, in the original budget, expected to receive $2.14 billion in foreign aid.

Although the donors assured the government of not slashing their financial assistance to Bangladesh, it is apprehended that the foreign aid flow would drop due to global meltdown, Economic Relations Division (ERD) sources said.

They also said Bangladesh rather might receive more than it used to get before the world economy plunged into deep recession, sources added.

The ERD sources said, they had already communicated with the multilateral and bilateral donors informally.

Bangladesh has already received 41 per cent or $875 million in aid. The amount was channeled to the country in between July and December last year while the amount was $822 million during the corresponding period of the last fiscal year.

The foreign aid in Bangladesh had neither gone above $1.6 billion nor below $1 billion a year for six consecutive years before cyclone Sidr and twin floods hit Bangladesh in the last fiscal year when aid disbursement stood at $2.08 billion, which is 25 per cent higher than the previous year.

The country received the highest amount of foreign aid in the last fiscal year after 1971-72, ERD sources said

It was a staggering figure that Bangladesh has received in foreign aid so far compared to that of the last fiscal year given the absence of any kind of natural calamity like Sidr and flood.

The period of political transition is also to be taken into consideration as donors at this stage are in the dark about the new regime to come and they have to look into the policy taken by the new government before any aid disbursement, sources added.

The Asian Development Bank will provide $453 million, the World Bank $280 million, Department of International Development $49 million, Germany $25 million, Japan $20 million, EU $10 million and Canada $12 million.

The donors in the 2008-09 fiscal year pledged to disburse $3.21 billion for 62 projects under the lending programme. In the last six months projects involving $1.76 billion have already been signed which is 55 per cent of the total aid.

In the last fiscal year during the same period projects involving $1.31 billion were signed.

This time Tk 5245 crore was earmarked for payment of foreign loan but as the value of taka went up against US dollar the amount was increased in the revised budget to Tk 5550 crore, said sources.

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