Foreign aid, loans and Bangladesh’s development
Dr. Muhammad Abdul Mazid, Former Chairman, National Board of Revenue : Immediately after independence, Bangladesh repaired a devastated economy, developed infrastructure and implemented various reforms to drive the wheel of the major sectors using foreign aid and loans. It is undeniable that sector-based needs and utilities were assessed while accepting this aid. But now, one of the significant expenses of Bangladesh’s revenue budget is the growing burden of repaying these foreign loans with interest.
The payment of foreign liability is increasing gradually, which will further increase for those currently engaged in lending the suppliers credit. If foreign earnings do not increase, this burden will reach a critical point. Aid-receiving nations usually do not face such problems if the foreign aid is utilized efficiently and timely. Loans and aid are expected to meet domestic expenses with limited resources. If that does not happen, problems will arise, making it very difficult to repay loans. Many sub-Saharan nations and corrupt economies faced such a crisis. However, the rising industrialist nations of Southeast Asia avoided a similar fate. The role that foreign aid played in Bangladesh’s development can be clearly understood when analyzing the reasons behind such successes and failures.
No nation can be continuously dependant on foreign aid; it is better to develop in a limited timeframe, because the same amount of relief cannot be guaranteed every time – global politics and economies are in constant flux.
A developing nation has to recognize which sector is receiving what amount of aid, determining the reason and time limit and where it will be used. Until June 2017, 24.28% funds were used in the energy and electricity sectors, while 24.78% in transportation and communication (road, bridges, railway, etc) sectors, 12.47% in water and agricultural sectors. The amount used in health, education and other social sectors totalled around 15.77%. Thus we have to assess whether the energy and electricity sectors are successful in efficiently utilizing such a vast fund.
There is a prevalent trend where the role that foreign aid plays in the development of some economies is often touted in propaganda. Furthermore, donor countries and organizations, in the pretense of foreign consultation, domesticate and make the receiver economies dependant on them. And because the burden of these loans have to be borne by three generations down the line, there should be debates in the media and even in the parliament regarding public awareness over the issue. That is how the people’s opinion can be identified.
Translated by Abrar Hussain