Dhaka likely to get increased US aid next year

FE Team | Published: October 02, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

A Z M Anas
The United States might offer increased aid to Bangladesh, provided Dhaka uses money "effectively" to organise democratic elections, combat corruption, and invest in human development, a senior American aid official said.
"There will be strong congressional support for a significant increase in funding in 2008 for Bangladesh," Denise Rollins, mission director of US Agency for International Development (USAID), Bangladesh, said in an interview.
"In Bangladesh, it's important that development assistance is used effectively to support the holding of free and fair elections, to fight against corruption and to improve the lives of Bangladeshis through investments in health, education and economic development," Rollins added.
But the mission chief insisted that USAID's proposed budget for Bangladesh needed to be endorsed by the Congress, as "changes may still be made."
If approved, Washington will channel around $110 million in development aid for the country in 2008, according mission officials.
Although the United States is still the world's dominant donor, its support for Bangladesh has begun to plummet since 2000, with Washington providing as low as $77 million for Dhaka last year.
Part of the reason why the US cut back on its assistance, mainly food support, is Bangladesh's near self-sufficiency in food production over a decade or so, USAID officials said.
She, however, ducked a question as to whether the US government considered a plan to scale up food aid, given Bangladesh's floods and the recent inflationary build-up.
Responding to a question, USAID officials said the overriding goal of US foreign assistance is to help build democratic, well-governed states that "respond to the needs of their people, reduce widespread poverty and conduct themselves responsibly in the international system."
Rollins also seemed to be upbeat about Bangladesh's possibility of getting the special aid package, dubbed Millennium Challenge Account (MCA).
Welcoming the caretaker government's efforts to address corruption, she said this and other steps being taken by the interim administration will help support "a case for eligibility for the Millennium Challenge Corporation's (MCC) threshold programme in the future."
The MCC doles out resources competitively following established eligibility criteria and depending on the availability of funding, he pointed out.
Eligibility for the threshold programme is based on 1) the country's overall performance on 16 policy indicators, 2) the country's demonstrated commitment to improving their scores on indicators which they fail, and 3) the country's ability to undertake reform, according to the MCC website.
"We're committed to work with the government to gather accountable and timely data during the indicator research process, and welcome their efforts in improving performance on indicators that feed into determining eligibility," Rollins noted.
Asked how the American aid agency viewed the Bangladesh's foreign aid regime where flows from multilateral lenders were dwarfing those of bilateral donors, she said both sides have "inherently different" roles.
"Bilateral donors usually provide funds to support priority development programmes identified by host governments, whereas multilateral lenders provide loan which require repayment with either concessionary or market interest rate," Rollins noted.
In some instances, the mission head said, the government may choose to borrow funds from a multilateral lender for development purposes because the investment of funds is expected to generate potential economic or social benefits that justify the cost of a loan.
"Unfortunately, grant funds from bilateral donors are limited and fall short of meeting all the needs for development funding," she added.
Buttressing further her argument, Rollins said as countries become more self-reliant and have better internal economic systems, they become less dependent on grant funding and shift to market-driven development mechanisms, such as the use of credit to fund investments to generate economic returns.