National policy on foreign aid on cards

Some 43 years after Independence, the Bangladesh government is formulating a national aid policy and is likely to finalise it in the first quarter of next year, said sources at the Economic Relations Division (ERD) of the finance ministry.
The ERD is working to prepare a draft that will be finalised in consultation with high-level stakeholders at a meeting, to be held by next January, said officials.
“We are working on it. Still, it is a draft-level work and consultation meeting. It will be sent to the Cabinet for approval after it is finalised,” ERD senior secretary Mohammad Mejbahuddin told The Independent.
The draft policy highlights future phenomena of the foreign aid situation and notes that when Bangladesh reaches middle-income status, external finance flows are bound to evolve significantly.
Official development assistance (ODA) flows from bilateral development partners (DPs) are likely to decrease. Other potential sources, such as support from southern sources, and dedicated funds may increase in the future, the draft said. The document observed that with the launch of new multilateral and regional financial institutions, it is foreseen that there could be important changes in the multilateral lending system.
The country had no comprehensive policy on foreign aid, though the country does obtain a significant amount from abroad in the
 form of project aid and grants. Earlier, Bangladesh was also a food aid recipient. About the policy, the document said it is being devised with a view to ensuring Bangladesh maintains a clear, effective and coordinated approach for mobilising and managing foreign assistance.

The policy will be applicable to the mobilisation of external resources and their effective management for development interventions in Bangladesh. The policy will provide guidance to support the implementation of domestic and international commitments to development cooperation and its effectiveness.
These external resources include ODA (grants and concessional loans), vertical funds and international foundations, climate fund, aid for trade, non-concessional, commercial borrowings, and other sources of cooperation, such as south-south and triangular cooperation.
Both on-budget and off-budget development cooperation will come under the purview of the policy. However, IMF credits, special borrowings by the food ministry, the Bangladesh Shipping Corporation, Bangladesh Biman and Bangladesh Petroleum Corporation, and assistance for defence and special assistance during disasters and natural calamities will remain beyond the scope of this policy.
According to the ERD’s Foreign Aid Budgetary Account (FABA), Bangladesh receives foreign aid to the extent of two per cent of gross domestic product (GDP) every year on an average.
After Independence, Bangladesh received a total of USD 62.39 billion of friendly aid from different bilateral and multilateral development partners.
While Bangladesh receives significant support from a large number of development partners, it is often argued that these partnerships are not relationships between equals. The donor-recipient relationship easily results in a power imbalance, which is not conducive to a country-led development agenda focusing on sustainable results.
The policy also places emphasis on transparency towards receiving foreign aid and its utilisation.
Former adviser to the caretaker government, Dr ABM Mirza Azizul Islam, told The Independent that the government would have to formulate the policy in conjunction with the country assistance strategy of development partners.
“The government should identify the priorities in the policy before finalising it. It is good news that the government is finally going to formulate a policy,” he added.
As he pointed out, however, there are hundreds of policies in Bangladesh, but these are not effectively used—which basically makes them useless.

National policy on foreign aid on cards

Some 43 years after Independence, the Bangladesh government is formulating a national aid policy and is likely to finalise it in the first quarter of next year, said sources at the Economic Relations Division (ERD) of the finance ministry. The ERD is working to prepare a draft that will be finalised in consultation with high-level stakeholders at a meeting, to be held by next January, said officials. We are working on it. Still, it is a draft-level work and consultation meeting. It will be sent to the Cabinet for approval after it is finalised, ERD senior secretary Mohammad Mejbahuddin told The Independent. The draft policy highlights future phenomena of the foreign aid situation and notes that when Bangladesh reaches middle-income status, external finance flows are bound to evolve significantly. Official development assistance (ODA) flows from bilateral development partners (DPs) are likely to decrease. Other potential sources, such as support from southern sources, and dedicated funds may increase in the future, the draft said. The document observed that with the launch of new multilateral and regional financial institutions, it is foreseen that there could be important changes in the multilateral lending system. The country had no comprehensive policy on foreign aid, though the country does obtain a significant amount from abroad in the form of project aid and grants. Earlier, Bangladesh was also a food aid recipient. About the policy, the document said it is being devised with a view to ensuring Bangladesh maintains a clear, effective and coordinated approach for mobilising and managing foreign assistance. The policy will be applicable to the mobilisation of external resources and their effective management for development interventions in Bangladesh. The policy will provide guidance to support the implementation of domestic and international commitments to development cooperation and its effectiveness. These external resources include ODA (grants and concessional loans), vertical funds and international foundations, climate fund, aid for trade, non-concessional, commercial borrowings, and other sources of cooperation, such as south-south and triangular cooperation. Both on-budget and off-budget development cooperation will come under the purview of the policy. However, IMF credits, special borrowings by the food ministry, the Bangladesh Shipping Corporation, Bangladesh Biman and Bangladesh Petroleum Corporation, and assistance for defence and special assistance during disasters and natural calamities will remain beyond the scope of this policy. According to the ERDs Foreign Aid Budgetary Account (FABA), Bangladesh receives foreign aid to the extent of two per cent of gross domestic product (GDP) every year on an average. After Independence, Bangladesh received a total of USD 62.39 billion of friendly aid from different bilateral and multilateral development partners. While Bangladesh receives significant support from a large number of development partners, it is often argued that these partnerships are not relationships between equals. The donor-recipient relationship easily results in a power imbalance, which is not conducive to a country-led development agenda focusing on sustainable results. The policy also places emphasis on transparency towards receiving foreign aid and its utilisation. Former adviser to the caretaker government, Dr ABM Mirza Azizul Islam, told The Independent that the government would have to formulate the policy in conjunction with the country assistance strategy of development partners. The government should identify the priorities in the policy before finalising it. It is good news that the government is finally going to formulate a policy, he added. As he pointed out, however, there are hundreds of policies in Bangladesh, but these are not effectively usedwhich basically makes them useless.