Entrepreneurship Development > Donar Agencies & NGO's

Foreign loans from World Bank surge, from Japan, China, India, Russia dip

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Archona Rani Saha:
Jahangir Shah



The loans and assistance for Bangladesh have declined as all the major donor countries and agencies, except the World Bank, have reduced loan disbursements.

Loans from the Asian Infrastructure Investment Bank (AIIB), Asian Development Bank (ADB), China, Russia and India have declined as compared to the past.

These agencies and countries are quite important considering the existing geopolitical context. Besides, the decline in loan disbursement from these countries in the year of election has sparked wide speculations in the country.

Not only the major countries and multinational agencies, disbursement of loans from foreign donors has also dwindled. This fund from these agencies comes through the NGO affairs bureau.

Loan disbursement from major countries and donor agencies had been rising for some years. However, it dwindled by USD 740 million in the last fiscal as compared to the previous year.

A record USD 10.01 billion was disbursed as foreign assistance in the 2021-22 fiscal. Bangladesh got some USD 9.27 billion in total from its development partners in the last fiscal of 2022-23.

The country got a commitment of USD 8.8 billion dollars in the fiscal year of 2022-23, which is USD 1.37 billion less than the previous year.

China, Russia and India are among the big countries which have influence in the politics and economy of Bangladesh.

Meanwhile, the World Bank (WB), ADB and Japan provide loans on easy terms. These agencies and countries always stress on good governance in spending money like the West. The attitude of the West clearly reflects in these countries and agencies.

On the other hand, China, Russia and India provide loans on tough terms. Loans from these countries require giving work to their contractors.

Asked about the reasons behind the decline in loan disbursement, state minister for planning Shamsul Alam told Prothom Alo that the pressure on the economy of big countries has risen due to the Russia-Ukraine war and the impact of Covid pandemic.

Their GDPs have dwindled as well. Those countries won’t be able to provide additional money to developing countries, including Bangladesh without adequate assets.

Besides, the demand from African countries has increased. The donor countries and agencies are spreading their allocation to more countries.

Speaking regarding such a decline in the year of election, Shamsul Alam said, “No country or agency disburses loans considering elections. They provide the loan on the basis of the financial condition of a country. Nobody reduces loan disbursements unless there is any major conflict in a country. The overall situation in Bangladesh is satisfactory.”

Who disbursed how much?
The WB and ADB disbursed the highest amount of loans for Bangladesh among the multinational lending agencies in the last fiscal. However, the disbursement of ADB loans has declined by USD 101 billion as compared to the previous year. The agency has disbursed a total of USD 1.56 billion in the last fiscal, which was USD 2.57 billion in the previous fiscal.

However, loan disbursement from the WB has increased gradually. It disbursed some USD 1.93 billion last fiscal, which was USD 260 million higher than the previous year. Another multilateral lending agency AIIB disbursed a total of USD 240 million, which is USD 50 million less than the previous fiscal. A huge sum of money for Bangladesh has been lying idle in the pipelines of these agencies. This information came up in the primary calculation of the ERD. The ERD is yet to publish the final report.

Meanwhile, all the countries giving Bangladesh loans bilaterally have reduced loan disbursement. Japan disbursed a total of USD 2.04 billion, which was the highest among the lending countries and agencies. However, it was some USD 170 million less than that of Japan disbursed in the previous fiscal.

China and Russia showed less interest in disbursing funds. China disbursed USD 1.01 billion for various projects in the 2021-22 fiscal, but Chinese funds dropped to USD 890 million in the 2022-23 fiscal. On the other hand, Russia released USD 1.22 billion in the 2021-22 fiscal and USD 990 million in the 2022-23 fiscal. Russia is mainly lending to Bangladesh on the Rooppur Nuclear Power Plant project.

Likewise, the disbursement of India’s funds also fell. India released USD 320 million in the 2020-21 fiscal and USD 290 million in the 2022-23 fiscal. India promised Bangladesh USD 7.36 billion under three lines of credit (LoCs). To date, India released USD 1.49 billion in the past 12 years.

Ahsan H Mansur, executive director of private research firm Policy Research Institute (PRI), told Prothom Alo more funds arrived as emergency assistance during the coronavirus pandemic for the procurement of vaccines and hospital equipment, but the flow of loans returned to normal now. Besides, the Russia-Ukraine war also contributed to less disbursement of funds, he observed.
ERD secretary Sharifa Khan could not be reached for comment over the mobile phone. She did not respond to text messages.

ERD officials, however, said big lending agencies and countries are under pressure because of the Russia-Ukraine war, and those agencies and countries have taken a go-slow policy. Bangladesh requires about USD 10 billion in loans annually, but the country receives about USD 5 billion from the World Bank, the Asian Development Bank and Japan, and takes the remaining credit supply from countries like China and India to meet the demand, ERD officials added.

Fall in foreign assistance
Along with the government, local and foreign non-government organizations (NGOs) that operate in Bangladesh, also bring in foreign funds, which were received through the government agency NGO Affairs Bureau. According to this government agency, foreign assistance, received by NGOs, fell six-year low of USD 740 million in the 2022-23 fiscal, which was USD 820 million in the preceding fiscal.

NGO Affairs Bureau director Tapan Kumar Biswas said foreign assistance did not drop significantly and it fluctuates every year. Global economic situations coupled with the coronavirus pandemic caused the fall in foreign assistance in the last fiscal, he observed.

But the good news is NGOs have reaped the benefits of dollar appreciation, resulting in an increase in amount of taka despite the drop in amount of foreign assistances.

NGOs received Tk 4.25 billion more in 2022-23 fiscal because of the rise in dollar price.

Transparency International Bangladesh (TIB) executive director Iftekharuzzaman thinks four reasons contributed to the fall in foreign assistance to NGOs.

Firstly, many countries and multilateral lending agencies face fund crises because of the Covid-19 pandemic and the Russia-Ukraine war; for this reason, fewer funds have been released for various projects in Bangladesh, especially, projects related to the Rohingya crisis.

Secondly, the flow of funds for NGOs working on good governance and rights in the country decreased because of the growing complex process.

Thirdly, Bangladesh is going to graduate from the least developed countries (LDCs) group to the list of developing countries, and for this reason, NGOs receive less funds.

Fourthly, the number of refugees has increased in various countries of Europe amid the global perspectives, and big economies and donor agencies in Europe are spending more funds to ensure the basic rights of refugees there.

As a result, those countries and donor agencies are allocating fewer funds to other countries.



Source:  Prothom Alo.
Original content: https://en.prothomalo.com/business/local/vz4qscf3hl

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