The government would target US$ 3.66 billion worth of foreign aid in the national budget next fiscal year (FY), 24 per cent up from that in the current FY, for developing the country's infrastructure and bankrolling deficit budget, officials said Friday.
The amount is $710 million up from the US$ 2.95 billion worth of foreign loans and grants target in the current FY 2013-14 despite the donors' cautious approach towards extending their support following the January 5 'one-sided national election', they said.
"We expect to mobilise a record $3.66 billion worth of loans and grants from the donors in the next FY 2015 to implement the development works and finance the deficit of the budget," a senior Economic Relations Division (ERD) official told the FE.
"We have already prepared the aid target for the next budget and sent it to the Ministry of Finance preparing the national budget for the FY 2015, he added.
ERD data showed that the government received $1.83 billion worth of loans and grants out of the revised target of $2.95 billion in the national budget in the first eight months of the current fiscal year (July-February).
The government had, however, attained weaker response from the development partners and lenders in getting aid commitment in the July-February period of this FY 2014, as they have confirmed $2.84 billion in assistance only in the said period, $936 million down from the corresponding period in the previous FY 2013.
Foreign aid including loans and grants has been one of the key components in Bangladesh's national budget ever since the country became independent in 1971 with almost empty coffers.
Although the country has over the years cut its dependence on external aid, it still needs substantial amount to execute major basic and social infrastructure projects such as bridges, power plants, education stipends etc.
ERD officials said in the next fiscal year the government would mobilise total $3.66 billion worth of external assistance-$2.88 billion loans and the remaining $780 million grants.
Out of the total target, $3.46 billion will come as project aid, $50 million as food aid and the rest $150 million as special support or budgetary support credit, they said.
The ERD would not seek any commodity aid from the donors after top aid agencies such as the World Bank (WB), the Asian Development Bank (ADB) and rich countries had expressed reservation about such assistance.
In the current FY 2014, the government set a revised target of total $2.95 billion worth of foreign aid earnings from the preliminary target of $3.37 billion.
In the previous FY 2013, the government received a record high $2.78 billion worth of foreign loans and grants from all the development partners for developing its infrastructure, cutting hunger and minimising budget deficit.
Another ERD official said despite the criticism by different bilateral and multilateral development partners, the WB had assured the government of continuing its support and the Manila-based lender ADB had also been providing some funds as budgetary support to minimise fiscal deficit over the last two financial years.
He said the total foreign aid this year is expected to meet target as the government has undertaken an ambitious development programme, where more external assistance will be required.
Development analysts have said with the internal revenue falling short of expectations, the government banks on foreign aid to keep its budget deficit down to a manageable 4.6 per cent of the Gross Domestic Product (GDP).
