DHAKA, June 18: Bangladesh’s share of loan in external resources swelled to 67.2 per cent in 2003-04 from 11.8 per cent in 1972-73, while the percentage of grant declined to 33.8 per cent from 89 per cent.
This was revealed in a report -— Flow of external resources into Bangladesh -— prepared in the first week of June by the country’s Economic Relations Division.
Since the country’s independence in 1971 to June 30, 2004, a total amount of about $41.77 billion of foreign aid was disbursed, of which 46.2 per cent was grants and 53.8 per cent was loans, the report says.
“The aid package, covering grants and loans, has undoubtedly contributed to the development of the economy but is also leading (Bangladesh) to growing external indebtedness,” says the report. “The decreasing volume of grants has resulted in a larger portion of loans in the total aid package. The share of grants which was 89 per cent in FY1972-73 declined to 53.2 per cent in FY1979-80, 55.4 per cent in FY1984-85 and 33.8 per cent in FY2003-04.”
The per capita indebtedness during the period has increased by about 21 times, due mainly to increase in loans and decrease in grants, says the report, which covers data up to June 30, 2004.
“The per capita debt obligation of the country has increased from $6.59 in FY1973-74 to $136.92 in FY2003-2004. While the share of grants in the external aid package is shrinking, the volume of external borrowing is increasing, which has resulted in a progressive increase of per capita debt obligation,” reads the report.
Asked about the reasons for changes in external resources, ERD officials told the press that changes in the donors’ perspective played a pivotal role in shifting their assistance from grants to loans.
They also pointed at global changes as another reason for shifting the donors’ priority from one region to another. “Donors, particularly the bilateral ones, during the last decade have been concentrating more on central Asian countries instead of extending grants to poor countries of the South Asian region, including Bangladesh,” said an ERD official.
According to the statistics, the total aid package comprising grants and loans during 1972-73 was $551.4 millin. Of the total, $65m or 11.8pc was available in the form of loan, while the remaining $486 millin or 89 per cent was grant.
