Multilateral development finances are supply-driven and not necessarily in response to countries' demands, particularly in respect of Sustainable Development Goals, Centre for Policy Dialogue Distinguished Fellow Dr Debapriya Bhattacharya said on Friday.
"The multilateral development financing system is growing around the world due mainly to the multilateralisation of bilateral funds," he said at a webinar organised by the Centre for Policy Dialogue and the Organisation for Economic Co-operation and Development.
"The three countries of South Asia, Bangladesh, Pakistan and Nepal, are steadily dependent on multilateral development finance. It [the dependency] is growing but with confusion. Obviously, there will be growth challenges."
There are some issues with partnership and coordination, he added.
"I believe that they [multilateral development organisations] have responded to crises, particularly during the Covid-19 and thereafter. However, the multilateral financing organisations are earmarking the sector as well as the country," the distinguished fellow said.
Lawmaker Kazi Nabil Ahmed, Centre for Policy Dialogue Executive Director Fahmida Khatun, Organisation for Economic Co-operation and Development Policy Analysis Head Olivier Cattaneo spoke at the event, titled "Multilateral Development Finance: Supporting an Inclusive and Sustainable Recovery in South Asia".
Foreign experts including India's Research and Information System for Developing Countries Director General Professor Sachin Chaturvedi, Institute of Policy Studies of Sri Lanka Research Director Dr Nisha Arunatilake, and Nepal's South Asia Watch on Trade, Economics and Environment Executive Director Dr Paras Kharel joined the programme.
They discussed different aspects of the recently published Multilateral Development Finance 2022 report by the Organisation for Economic Co-operation and Development.
Fahmida Khatun said according to the annual report published by the global policy forum, multilateral development organisations have increased assistance, yet there is a huge gap.
The report shows the gap – a 63% fall in humanitarian assistance in 2022.
The speakers also expressed their concern over the rise of non-concessional finance against the concessional – crucial for the least developed countries.
They also added that LDC graduating countries will face more challenges to get multilateral development finance because they will lose the quota-free and duty-free market access, and the eligibility to avail low-interest loans.