Megaprojects keep foreign aid flow robust

Bangladesh received $3.09 billion in foreign aid from its development partners in this fiscal’s July-November period.

Among the lenders, the Asian Development Bank (ADB), Japan and China released more foreign aid than the World Bank, a report by the Economic Relations Division (ERD) of the finance ministry shows.

“Fund disbursement depends on projects. Japan, China and Russia’s disbursements increased as they are funding megaprojects. The WB is funding small projects here,” Zahid Hussain, a former lead economist of World Bank’s Dhaka office, told The Business Post.

Development partners made assistance commitments of $3.93 billion in loans and grants from July to November. During this period, ADB disbursed $1.44 billion, Japan International Cooperation Agency $449 million, China $379 million, Russia $193 million and World Bank $284 million.

The ADB’s commitment was $800 million, Japan’s $355 million, China’s $1,127 million and the World Bank’s $500 million.

Bangladesh received $2.07 billion in foreign aid in the same period last FY.

China is funding Karnaphuli Tunnel and Padma Rail Link, while Japan is financing the Metro Rail project and Russia the Rooppur Nuclear Power Plant.

Of ADB’s $1.44 billion funds, more than $500 million is being used to tackle Covid-19 in the country, an ERD official said. Policy Research Institute’s Executive Director Ahsan H Mansur said Bangladesh received over $7 billion in foreign aid in two consecutive FYs.

“It’s a positive sign for the country’s development,” he said. “We did not face any financial crisis during the pandemic thanks to inflow of foreign assistance.”