$3B in Foreign Aid for Development Projects Delayed in Approval

Foreign aid disbursements and commitments from development partners have decreased in the first nine months of the current fiscal year, according to data from the Economic Relations Division (ERD) of the finance ministry. Disbursement fell by 21% to $5.36 billion, while commitments declined by 43% to $3.07 billion. ERD officials attributed the drop in disbursements to the lack of capacity to implement ongoing development projects and the release of funds for budget support and vaccine purchases in the previous financial year.

Over $3 billion in foreign aid for eight development projects in Bangladesh has been stuck in the pipeline as the executive committee of the National Economic Council (ECNEC) delays approval. However, the Japan International Cooperation Agency (JICA) and the World Bank have approved loans for implementing these projects. The Planning Commission has taken steps to expedite the approval of foreign-funded projects, and inter-ministerial meetings have been held to speed up the approval process.

The World Bank has approved a new five-year Country Partnership Framework (CPF) for Bangladesh with the aim of assisting the country in achieving its goal of becoming an upper-middle-income country by 2031. The CPF, which will be implemented from 2023 to 2027, will provide financial and technical assistance to support Bangladesh's development and growth objectives.

Japan has pledged to provide 30 billion yen in new budget support assistance to Bangladesh during a summit meeting between Bangladesh's Prime Minister and the Japanese Prime Minister. The two leaders also decided to resume a bilateral policy dialogue in carrying out development cooperation projects.

Bangladesh will receive more than $2 billion a year from the World Bank Group over the next four years to help the country prepare for its next phase of development. The country partnership framework for 2023-2027 is based on the government’s eighth five-year plan and will aim to increase private sector jobs, enhance climate resilience and improve socioeconomic inclusion.

Foreign loans in the Annual Development Programme (ADP) are expected to decline in the next financial year due to poor utilisation by implementation ministries and divisions. The finance and planning ministries predict that the foreign component will drop to 35.1% in the ADP worth Tk2.63 lakh crore for financial year 2023-24, down from 36.33% in FY23 and 37.7% in FY22.