A third of the loan and foreign aid Bangladesh received during the first half of the current 2013-14 fiscal year (FY) was spent on repaying previous loans and interest, according to the Economic Relations Division (ERD).
Bangladesh received around $1.57 billion from donors during July-Jan period, $14.1 million more compared to the same period of last 2012-13 FY.
During this time, the government repaid $593.2 million in loans and interests, roughly 38 percent of the amount received, data from the ERD indicated.
Bangladesh received $2.78 billion in aid last fiscal – net aid was $1.89 billion and $899.5 million was spent in repaying loans and interests.
Finance Minister AMA Muhith hopes the inflow of aid would increase in the last five months of the current fiscal (Feb-June).
Speaking to bdnews24.com, he said last year’s violent political scenario did not apparently have much of an effect on the economy.
“We have already started to pull out of it. Both the export income and foreign aid rose amid the turmoil and the remittance inflow was buoyant.
“The forex reserve has crossed the $19-billion mark. The import was dropping, but it is increasing now,” he said.
Muhith believes the economic indices will get better despite volatile political situation.
Bangladesh Institute of Development Studies (BIDS) Research Director Zaid Bakht said the inflow of foreign aid is slow at the beginning of every fiscal year.
“The amount [of foreign aid] received last Nov-Dec period amid turmoil was healthy. There was no turbulence in February. It seems the situation would remain peaceful until June.”
He said donors would disburse more once the government’s development projects gain pace.
According to the ERD, in the July-Jan period, various donors and organisations disbursed around $1.57 billion – around $1.26 billion in loan.
The World Bank tops the list with $588.2 million followed by the Asian Development Bank at $339 million and JICA with $223.8 million in grants and loan.
Early last year, the government withdrew its $1.2 billion funding request from the Washington-based global lender for the Padma rail-road bridge project and decided to go ahead with domestic funding.
Many feared the move would strain relations with the World Bank.
“The fear, however, did not turn out to be true,” said Zaid Bakht.