The New Nation - Internet Edition

Staff Reporter

Amidst a declining trend in foreign assistance recent years, Bangladesh is going to seek $1,623 million loan from the World Bank (WB) in the current fiscal year (FY) out of the bank's promised amount of $2.96 billion to lend in four years under its Country Assistance Strategy (CAS) paper.

The demand will be placed to the WB Headquarters before launching the annual meeting of WB and International Monetary Fund (IMF) in Washington, DC scheduled for October 22-23, sources in the Government said.

A high-level government delegation led by Finance and Planning Adviser Mirza Azizul Islam is now staying in Washington to join the meeting.

The government has prepared a report on the status of WB assistance for different projects, which will be placed before the meeting when the adviser raises the subject.

Although, according to CAS, the WB had pledged $1,590 million to Bangladesh for the 2005-2006 and 2006-2007 financial years, it gave the country only $819 million. Of which, $456 million was provided for 2005-2006 FY and $363 million for 2006-07 FY.

The Bangladesh team will ask the WB for the carry over from last two FYs, which is $771 million, along with WB's commitment for the current FY, which is $852 million. "We want the WB to follow the CAS and disburse the aid it has committed," additional secretary of the Economic Relations Division (ERD) Shaheedul Haque told journalists yesterday. "We need the pledged funds to carry forward projects we failed to execute in the previous two years because of a funding crisis," he said.

Official record shows the share of grants in the external aid package declined to 31.9 per cent in 2005-06 from 88.2 per cent in 1972-73 fiscal year. The share of loan has swelled to 68.1 per cent in 2005-06 from 11.8 per cent in the fiscal year that coincided with the country's independence.

The share of grants, which was 89 per cent in the fiscal year 1971-73 declined to 53.2 per cent in FY1979-80, 55.4 per cent in FY1984-85 and 31.9 per cent in FY2005-06, said the report, prepared by ERD.

The decreasing volume of grants has resulted in a larger portion of loans in the total aid package and increased per capita debt by 21 times.

'The per capita debt obligation of the country has increased from $6.59 in FY 1973-74 to $139.91 in FY 2005-2006,' said the report that compiled data up to June 30, 2006.

Donors, particularly the bilateral ones, during the last decade have been concentrating more on central Asian countries, gradually washing their hands of poor Asian countries, including Bangladesh, ERD officials said.

According to the statistics, the total aid package comprising grants and loans in 1972-73 was $551.4 million. Of the total, $65 million or 11.8 per cent was available in the form of loan, while the remaining $486 million or 89 per cent was grant.

Bilateral donors were then more inclined to help the war-ravaged newborn nation to rebuild its infrastructures and feed its population, officials said.

ERD figures gave a chronology showing how loan overtook the share of grants in external assistance.

Total aid package in the 1980-81 fiscal year was $1,146.40 million, of which loan was $552.7 million or 48.2 per cent and grant $593.7 million.

External funds totaled $1,732.6 million in 1990-91, including $901.1 million or 52 per cent loan and $ 831.5 million grant.

In 2003-04, Bangladesh received $1,033 million in foreign funds, of which $695 million or 67.2 per cent came as loan, while the remaining $338.5 million or 32.8 per cent was grant.

During the period, project aid has leaped from 1.3 per cent to 96.9 per cent, while both food and commodity supports have been slashed from 98.7 per cent to 3.1 per cent, said the report.

The total aid package in the 2005-2006 was $1.56 billion, of which $1.06 billion or 68.1 per cent was given in the form of loan.

The remaining $500.5 million or 31.9 per cent was given as grant.

According to the report, since independence until June 30, 2006, a total amount of about $44.82 billion of foreign aid was disbursed, of which 44.7 per cent was grants and 55.3 per cent loans.