Govt plans to sign loan agreement of Tk 1000b in current fiscal year

The government has planned to sign loan agreements of Tk 1000 billion with development partners including the World Bank, the Asian Development Bank and Japan.

The government has made this plan to receive this loan from the development partners.

Such a plan of signing agreements of huge amounts of loan has not been made in a fiscal year in the past.

Economic Relations Division (ERD) sources said the government has targeted to sign loan agreements of USD 993 dollars with the partners in the current fiscal year. As per the current value of dollars, the amount stands at Tk 1090 billion. Meanwhile, loan agreements of USD 720 dollars have been signed in the last eight months (July-February). So 72 per cent of the targeted loan agreements have been signed.

Economists said it is very urgent to release foreign loan assistance at the moment. The supply of dollars needs to be increased to tackle the dollar crisis and maintain foreign exchange reserves. If the flow of foreign loans increases, entry of dollars into the country will increase.

When asked about the matter, research organisation Policy Research Institute (PRI) executive director Ahsan H Mansur said the release of foreign loans has to be increased considering the economic crisis due to the dollars and reserve situation. As a result, the flow of dollars into the country will increase.

It would be better if the budget assistance was got rather than the project assistance regarding the foreign assistance, he observed.

Ahsan H Mansur said loan agreements should be made through judgements and analysis as these loans have to be paid along with interest.

Meanwhile, a committee was formed on 24 January to get the pledged funds cleared, with prime minister’s principal secretary Tofazzel Hossain Miah as its head.

According to the ERD plan, there is a plan to sign a loan agreement of USD 2.99 billion dollars with ADB. Meanwhile, loans of USD 2.62 billion dollars have been signed between July-February.

The government has a plan to sign loan agreements of USD 2.41 billion with Japan in the current fiscal year. Meanwhile, loan agreements of 2.02 have been signed in eight months of the current fiscal year.

Besides, the government has already signed loan agreements of USD 1.42 billion with the World Bank as per the target. Currently the government has no plan to sign new loan agreements.

According to the Economic Relations Division (ERD), different donor countries and organisations have pledged a total of USD187.64 billion in grants and loans to Bangladesh since independence. But, Bangladesh could not use about 32 per cent or one-third of the grants, and the amount of unused grants is rising consistently.

In total, Bangladesh has been able to use USD126.87 billion in foreign aid till last January, while the donors canceled the pledge of USD14.22 billion due to various reasons, including corruption.

The remaining USD46.55 billion is now in the pipeline, which Bangladesh can use if it wants.

A staggering amount of USD21.82 billion, which is half of the total fund in the pipeline, is now held by three big donor agencies and countries – the World Bank holds USD7.66 billion; the Asian Development Bank $5.71 billion and Japan holds the highest USD8.25 billion. Besides, China and India committed to providing large amounts on various occasions.

A senior ERD official told Prothom Alo there are problems in project implementation, likewise, ministries are less interested in projects with foreign assistance due to donors' conditions and bureaucratic complexities related to development projects.

According to this official, the release of foreign assistance funds has increased by several folds over the past couple of years.

*This report, originally published in Prothom Alo print and online editions has been rewritten in English by Rabiul islam