New commitments for foreign funding have plummeted by over 60% although disbursements registered a significant rise of 55% in the first quarter of the current fiscal year.
During the July-September period, development lenders disbursed $1445 million in contrast to the $931 million over the same period in the last fiscal year, according to an updated report on foreign funding by the Economic Relations Department (ERD).
ERD officials said foreign fund disbursement has increased as the Japanese government has released its promised budget support to help Bangladesh cope with the Covid-19 situation.
But when it comes to availing new commitments, this quarter painted a dismal picture, with development partners pledging only $797.47 million – a significant fall from the $2016.76 million during the same time a year before.
The ERD officials hope that the government will be able to avail the funding commitments as per its target in the remaining nine months of the fiscal year despite a significant drop in the first three months.
A target has been set to draw in $6 billion in commitments in the fiscal 2020-2021. The government is also negotiating with different development partners to get $8-$10 billion more in a year or two, they added.
According to Shahabuddin Patwari, additional secretary of ERD, $250 million in budget support will come from the World Bank. Besides, the development lender is expected to provide $250 million more to help the country's economy recover from pandemic shocks.
There are also possibilities of deals amounting to $1.8 billion being signed for different development projects.
Abdul Baki, additional secretary of ERD, expects to get additional budget support to the tune of $500 million from the Asian Development Bank (ADB).
Dr Zahid Hussain, former lead economist at the World Bank's Dhaka office, said a rise in foreign fund disbursements in the first quarter is good news. But the government should also emphasise increasing fund release from project assistance alongside budget support. For this, it is essential to speed up project implementation.
Talking about disbursements, he said a big amount in budget assistance has come from the development partners to fight the Covid-19 situation. More financial support is in the pipeline. Project support will also increase.
New funds from the World Bank's IDA-19 and the ADB are on the horizon. Loans for projects can be obtained from such funds. So, commitments for funding in projects will go up too in the future, Dr Zahid added.
ERD officials said as work on many development projects slowed down because of Covid-19, the foreign fund disbursement was low. In July-August, $528 million was released and later, in September, the loan disbursement increased after construction of some projects picked up a pace.
Meanwhile, the government paid back over $508 million, including interests to different development partners in the first quarter. In the same period last fiscal year, the amount was over $459 million.