Japan leads development funding to Bangladesh

Japan leads development funding to Bangladesh by releasing the highest US$1.66 billion worth of assistance among the foreign financiers in recent tough times facing the country amid forex crunch.
The amount of foreign-aid disbursement by Japan was the highest during the first 10 months from July to April of the outgoing financial year (FY) 2023-24, in keeping with its top position since last fiscal, official data showed.
In the FY2023 also, Bangladesh received the highest $1.94 billion in loans and grants from the historically highest bilateral donor, Japan, according to the Economic Relations Division (ERD) data.
During this past July-April period, the total amount of the assistance was nearly $600 million higher than Bangladesh's historically largest development partners-the World Bank-and nearly $200 million higher than the second-biggest financier- the Asian Development Bank.
The Manila-based Asian bank disbursed $1.499 billion worth of assistance and the Washington-based WB $1.05 billion during the period in question.
In the past fiscal, Japan disbursed $1.94 billion worth of loans and grants in FY2023. But the ADB released $1.787 billion and the WB $1.898 billion.
"Japan has emerged as the biggest development partner of Bangladesh in recent years, as its fund disbursement is rising year on year," says a senior ERD official in appreciation of the gesture at a time when the country faces the toughest challenge on the financial front from foreign-exchange inadequacies.
"The amount of foreign assistance from Japan is higher than that of two other larger development partners -the WB and the ADB," he adds.
According to another ERD official, Japan is currently bankrolling some mega-and larger projects in Bangladesh which need lots of fund investment every year.
The developed Asian country is financing MRT-01, MRT-05 and MRT-06, the rail bridge over the Jamuna, and the third terminal at the Hazrat Shahjalal International Airport in Dhaka.
For the Uttara-Motijheel MRT-06, Japan International Cooperation Agency (JICA) has made a commitment of $2.1 billion.
In June 2022, JICA confirmed $979.8 million (JPY 133,399 million) in credit for building MRT-05 from Hemayetpur to Vatara in Dhaka.
For the Airport-Kamalapur MRT-01, Dhaka will receive $1.10-billion loan from Tokyo as they signed an agreement in 2021 for construction of Dhaka's first underground metro rail.
For the third-terminal project, Japan has recently signed an agreement for providing some $517.27 million (JPY 76.635 billion).
Earlier in August 2020, JICA confirmed nearly $750 million (JPY 80 billion) worth of aid in the first installment for the same project.
Meanwhile, the agency provided a record $2.314 billion worth of aid in FY2022, some $1.945 billion in FY2021 and $1.69 billion in FY2020, the ERD data showed.
JICA's support has been on the rise since FY2018 when it disbursed $1.54 billion in foreign assistance, up by $899 million from FY2017.
Japan disbursed $1.195 billion in FY2019 and $1.544 billion in FY2018.
Meanwhile, the country's biggest multilateral financier, the World Bank, disbursed $1.42 billion in FY2018, $2.03 billion in FY2019, $1.51 billion in FY2020, $1.64 billion in FY2021, $1.739 billion in FY2022 and $1.93 billion in FY2023.
The ADB released $938 million in FY2018, $1.25 billion in FY2019, $1.70 billion in FY2020, $1.30 billion in FY2021, $2.628 billion in FY2022 and $1.56 billion in FY2023.
Historically, Japan also remains the third-largest donor among its peers operating in Bangladesh. In 2012, it became the largest bilateral donor to Bangladesh.
Japan has so far provided financial support worth $31.84 billion for the socioeconomic development of Bangladesh since the country's independence in 1971.
The interest rate on Japanese loan is also the lowest among all the development partners. The Japanese lending rate is nearly 1.30 per cent for construction, 0.20 per cent for consultancy and 0.20 per cent as the front-end fee (at a time).
The repayment period of its credits is now 30 years, including a 10-year grace period.

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