Staff Reporter :
The government is waxing its policy to obtain more foreign loans as a strategic measure to prevent the depletion of the country’s foreign exchange reserves and to bolster the supply of dollars.
The Economic Relations Department (ERD) under the Finance Ministry is actively engaging with development partners, aiming to secure at least $1 billion from pledged foreign loans by June.
Ministry officials have disclosed that they are urging development partners to expedite the disbursement process for pledged funds from foreign-funded projects, emphasising the need for ease and speed in accessing these funds.
Additionally, the government is vigorously advocating for flexible or low-interest loans and assistance. Furthermore, there are plans to expand the scope of acquiring hard-term or rigid loans to strengthen foreign exchange management.
Despite efforts to address the ongoing dollar crisis, which has persisted for more than two years, challenges remain.
Remittance flows and export earnings are not showing significant improvement to alleviate the crisis. Meanwhile, the inability to reduce the cost of imports exacerbates the dollar shortage, posing a significant challenge for policymakers, especially with the government facing a current account deficit.
Given the circumstances, external borrowing is viewed as a viable solution to mitigate the deficit. Over the past few years, the government has increasingly leaned towards securing hard loans, a trend that is expected to continue, according to ERD officials.
At the same time, initiatives have been taken to increase the flow of foreign currency to deal with the long-standing dollar crisis in the country, implement foreign-aided projects, and speed up loan repayments, they said.
Policymakers believe that the quick disbursement of the loans will help to increase foreign exchange reserves as well as the dollar supply in the country.
Meanwhile, the Planning Commission feels that proper utilisation of foreign loans and grants plays a helpful role in maintaining sustainable growth and a balanced trade situation.
Economists said that it is very important to take measures to disburse the foreign aid at the time, as there is no alternative to increasing the supply of dollars to overcome the dollar crisis and to maintain foreign exchange reserves.
Dr. Zahid Hussain, former lead economist of the World Bank Dhaka office, told The New Nation, “As the reserves are not growing much relying on remittances and export earnings, the government has no alternative to being dependent on foreign loans. If the flow of foreign loans rises, the flow of dollars in the country will increase.”
According to the latest report prepared by the ERD on the current situation of the country’s foreign debt, the Asian Development Bank (ADB) is at the top of the list of foreign loan disbursements to Bangladesh.
ADB disbursed $1.4 billion in the first nine months (July–March) of the current fiscal year.
Japan is in second place, as the country gave $1.35 billion. The World Bank, which is in third place, has released $0.96 billion. Russia and China are ranked fourth and fifth, respectively. These two countries have disbursed $0.8 billion and $0.36 billion, respectively, during the mentioned period.
