Govt targets $2.25b foreign aid in 2010-11 fiscal year

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FHM Humayan Kabir
The government hopes to mobilise a record US$2.25 billion foreign aid in the next financial year to execute key development projects, officials said Saturday.
The amount -- in loans and grants -- is Tk9.51 billion up from the figure it targetted to net in the current fiscal year despite the donors' recent outburst over changes in laws related to procurement of goods and services for development projects.
"We expect to mobilise a record Tk 155.4 billion ( $2.25 billion) from donors in the 2010-11 financial year to implement the Annual Development Programme (ADP)," a senir Economic Relations Division official told the FE.
The official said they have advised the planning ministry to prepare the 2010-11 development budget, "keeping the amount in mind".
Foreign aid including loans and grants is a big component in Bangladesh's annual development expenditure ever since the country became independent in 1971 with an almost empty coffer.
Although the country has over the years cut its dependence on external aid, it still needs substantial amount to execute major basic and social infrastrcutrue projects such as bridges, power plants, education stipends etc.
Officials said the government would next year mobilise Tk 128.50 billion fund as project aid, Tk 6.21 billion as food aid and Tk 20.70 billion as special support or credit for development projects.
The ERD would not seek any commodity aid from the donors after top aid agencies such as the World Bank, the Asian Development Bank and rich countries have expressed reservation about such assistance.
In the current 2009-10 fiscal year, Tk 0.70 billion worth of fund has been targeted as commodity aid.
In first eight months to February, Bangladesh has received a record foreign assistance worth US$1.23 billion (Tk 84.87 billion) even though the WB and the ADB have publicly criticised the government's recent changes in public procurement laws.
Both agencies have said they would not accept the amendments and sought to review accords of development projected worth billions of dollars aided by them.
The ERD official said despite the criticism, the WB has assured the govermment of $200 million and Japan government $100 million funds as budgetary support to minimise fiscal deficit in the next fiscal year.
He said total foreign aid next year would surpass the target as the government was expected to receive some special funds including the package announced by G-20 rich countries for weathering global economic downturn.
Officials said with the internal revenue falling short of expectations, the government was banking on foreign aid to keep its budget deficit down to a manageable five per cent of the Gross Domestic Product (GDP).