The countrys net receipts of foreign loans and grants dropped in July-February period of the current financial year 2023-24 compared with the same period in the previous year.
According to Bangladesh Bank (BB) data, the net foreign aids, after principal repayment, decreased to $3,725 million in July-February of FY24 compared with $3,869 million in the same period of the past year.
Experts said the country took foreign assistance to finance budget deficit, to address huge balance of payment deficit and to fund the annual development programme.
The foreign aids could be received as loans and grants, bilateral aid and multilateral aid, besides food aid, commodity aid and project aid.
In July-February of FY24, total foreign aids, however, increased slightly to $4,997 million compared with $4,876 million in the same period in the past year.
Of the total foreign aids, project aid was $4,987 million in July-February, 2.79 percent higher than $4,851 million in the same period of the past year.
The grant as percentage of net foreign aids in the reported period was 5.93 percent. The principal payment for July-February was $1,271 million, which was $1,007 million in the same period in the past year.
The total foreign aid and net foreign aid were $9.2 billion and $7.5 billion respectively in the financial year 2022-23 against $10 billion and $8.48 billion respectively in the FY 2021-22.
Experts said foreign aids had increased during the pandemic year due to pandemic-centric assistances by foreign donors. However, since 2022, the inflow of foreign aid has started falling.
The countrys economy in recent months has been grappling with various issues, including dollar crisis, exchange rate volatility and depleting reserve. Remittances, export earnings and foreign aid are primary sources of dollar for banks, BB officials said.
The reserves had stood at $41.8 billion on June 2022 and $46.2 billion in September 2021.
Over the past 34 months, Bangladesh Bank has sold approximately $32.79 billion, including $13.5 billion in the financial year 2022-23 and $7.62 billion in FY22, from its foreign exchange reserves to banks.
The sales mopped up equivalent local currency from the banking system. The current dollar shortage has already forced the government to secure $4.7 billion in loans from the International Monetary Fund over a period of three years.
The BB has adopted a market-based and unified exchange rate regime, allowing the exchange rate to be determined by market forces. Currently, the BB is selling dollars at Tk 110 a dollar, which is also the inter-bank dollar rate.
However, many banks are collecting remittances at rates as high as Tk 118 each to meet their demand, despite the rate being set at Tk 110 each by the Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers Association (BAFEDA).
