BD foreign loan down in first 2 months of FY25

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Business Report :

Bangladesh’s foreign loan commitments took a deep dive down in the first two months of the ongoing fiscal year 2024-25 (FY25), witnessing a 98% year-on-year fall.

The period coincides with the countrywide movement in July and August which eventually led to the resignation of former prime minister Sheikh Hasina.

In July and August of this year, Bangladesh secured $20.16 million in foreign aid commitments from development partners for project funding and budget support, a dramatic decrease from the $1.14 billion during the same period a year ago, according to the Economic Relations Division (ERD) data.

According to ERD officials, the fall is owed to the recent political turmoil amid the Anti-Discrimination Student Movement and the interim government’s d

The government’s decision to review the projects has resulted in no new loan agreements being inked with the development partners.

However, officials said loan agreement signing will start after the review, which is expected to fulfil foreign aid commitment targets.

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ERD officials also said after the formation of the new interim government, various multilateral and bilateral development partners including the World Bank, the Asian Development Bank (ADB) have given preliminary assurances of loan assistance and budget support for various projects in Bangladesh.

If the commitments are met, Bangladesh is expected to secure the highest amount of foreign aid in its history this fiscal.

The interim government has embarked on a review of all foreign-funded projects – whether ongoing, proposed, or under negotiation – to identify priority projects, initiate their implementation, and discontinue those deemed unnecessary.

ERD has already issued letters to government agencies that are implementing foreign-funded projects.
The letter asks agencies to submit a priority list, along with information on project rationale, feasibility, and progress, by the end of this month.

According to ERD officials, the priority list is being sought to assess the significance of foreign-funded projects, cancel those deemed non-essential, and prioritise the allocation of foreign loans.

ERD sources said lists of foreign loans are already being submitted by various ministries and divisions. ERD will review these lists and send them to the Planning Commission. On a priority basis, the Planning Commission will then proceed with the project approval process and the ERD will initiate the loan process.
On 18 September, after a meeting of the Executive Committee of the National Economic Council, Planning Advisor Professor Wahiduddin Mahmud told reporters that all the projects in the pipeline would be selected.