Final Project of the Introduction to financing of development

2. Background
World is fighting to remove the
poverty from the society. Many
welfare organizations have
contribution to reduce the
poverty from the all over the
world. World Bank is working
with a motto on “Our Dream is
a World Free of Poverty” for its
142 client countries. The main
objective of the World Bank
motto is to end the extreme
poverty in the next generation.

3.  According to the objective, World Bank launched
different development project all over the world.
Initially, Millennium Development Goal with the 8
unique goals was fixed to reduced poverty in 2000 for
next 15 year. The time line is tent to finish. Different
lagged behind countries have achieved few goals.

4. According to the progress report of MDG, in
2012, 12.7 percent of the world’s population
lived at or below $1.90 a day which was 37
percent in 1990 and 44 percent in 1981.
If we consider in number, in 2012, 896 million
people lived on less than $1.90 a day, compared
with 1.95 billion in 1990, and 1.99 billion in
1981.

6. SDG
There is a clause that every
OECD will provide 0.7% of their
total GDP. Recently World Bank
has coined the new goals called
Sustainable Development Goals.
In this menu, world will fight for
zero poverty people within the
2030. There are different goals
where most of them are focused
on the zero poverty. In SDG,
every country should remove the
poverty and income inequality by
its own domestic financing.

7. Sequence of Goals

8. Sequence of SDG goals to ensure
zero Poverty
 If we take proper steps regarding environment the
two goals of sustainable Land and Marine life security
and use will be ensured. Sustainable Pure drinkable
water and industrial development goals will follow the
previous environmental development goals.
Sustainable city and communities and energy for all
will be ensuring immediately. If we do this in a income
as well as supply-demand equality basis and ensure
the a descent growth, poverty will remove gradually
from the society. Zero poverty in society will ensure all
other sustainable goal like Health, Education, well
being, zero hunger, social justice and zero gender
discrimination.

9. Global Partnership
Though World Bank, emphasize on
domestic financing to achieve the
all the sustainable development
goals. There are 50 least
Developed and 51 developing
countries in the world. The
developing countries have been
trying to develop their socio
economic infrastructure but LDCs
have badly needed of global
partnership for their sustainable
development. Bangladesh is one of
the less develop country in the
world.

10. Present Domestic and
Global Financial Sources
of Bangladesh
and
Recommendation

11. Present Scenario of the Development Finance in
Bangladesh (Cont.)

12. Total Debt Domestic and External in billions and
debt share of GNI, 2005 to 2015
0
5
10
15
20
25
30
35
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Debt External debt Public debt External debt stock to GNI (%)
Taka %

13. Present Scenario of the Development
Finance in Bangladesh
 Revenue, ODA, and borrowing/debt are the main sources
of development finance by the government of Bangladesh.
 It can be seen from the figure that all of these resources
have been increasing over time with a dip in performance
for some flows in 2013/14.
 Borrowing and revenue are the biggest sources of financing
for Government. Currently borrowing is at 18% of GDP and
revenue as a share of GDP is around 10 %, ODA is about 2
%.
 Outside of the public sector, the most important
development finance flows are: private investment 23.3
billion USD in 2014 and Remittances standing at 14 billion
USD in 2014.

14. Use of ODA in Bangladesh

15. ODA Diagnostic

16. ODA
 Improved alignment of commitments, allocation and disbursement of
ODA through better management by ERD and line ministries.
 Manage the reduction in the time it takes to approve and implement
ODA projects through ERD and line ministries.
 Achieving LMIC status may result in less concessional terms for
borrowing from ODA donors in particular from international
development banks. A strategic plan taking into consideration related
debt management issues can be considered
 Fast track implementation of the PFM reform project. A reduction of
perceived fiduciary risk associated with ODA will accelerate
commitments and disbursement. In particular requires improvement
of the procurement system to manage leakages and sub-standard
tendering processes in line with international best practice
 Under the new Partner Policy Framework promote the use of as an aid
modality supporting Bangladesh. Budget Support is fully aligned to
national priorities and is given once in the budget cycle to help budget
smoothing

17.  Revenue
 According to the 7th FYP Total
revenue to be raised from 10.7%
of GDP to 16.1% by FY20
 Efficiency of the Public
Sector

18.  Efficiency of the Public Sector
Accelerating Private sector
Development
 Climate Change Finance
Private sector is supposed to
account for 78% of 31.9 trillion taka
under the 7th FYP
Accord high priority for adopting and
implementing the Climate Fiscal
Framework

19. PPP
 Fiscal Incentives: There are provisions permitting PPP investors
to benefit from various fiscal incentives (for e.g. reduced import
tax on capital goods, various tax holidays) to reduce the cost of
implementing the project and to enhance viability of project
 Special Incentives (Non-Fiscal): Any specific project may get
special incentives or other non-fiscal incentives to support the
implementation of policy objectives or to enhance the ease and
efficiency of delivering the project. These may include
exemption from specific provisions related to insurance
regulations, banking regulations, foreign exchange regulations
etc.
 Viability Gap Financing: A budgetary fund to provide financial
subsidy for PPP projects that have high socio-economic value but
are not sufficiently commercially viable to be delivered on a PPP
basis. Up to 30% of the total project cost can be subsidised either
as part of a capital contribution during construction or in the
form of annuity payments during operation

20. PPP
 A PPP Technical Assistance Fund with an initial endowment of
approximately US$ 12m will be established to provide early stage
project development funding support to sanctioned PPP
projects. The PPPTAF will help defray the cost of professional
consultants and advisors needed to assure the government
achieves appropriate risk allocation in PPP projects and pre-
develops projects to a standard that attracts maximum interest
from investors and lenders
 The Bangladesh Infrastructure Finance Fund Limited, or BIFFL,
was incorporated by the Ministry of Finance in 2011 to provide
long-term financing in local currency to infrastructure projects
that meet BIFFL's investment criteria. BIFFL seeks to attract
investment from both institutional and retail investors
(including non-resident Bangladeshis and overseas foreign
workers) to provide an alternative savings/investment vehicle in
the Bangladesh market. BIFFL is managed independently
following objective investment criteria.

21. Inclusive Business Finance
 The initial BB target for all banks and financial institutions was Tk240
billion (USD3billion) in SME loans for 2010.
 The target for 2012 was nearly two and half times the original at Tk590
billion (USD7.37 billion).
 BB has also initiated subsidised programmes with specific foci, such as
agriculture and women - with a target of Tk138 billion (USD1.725
billion) for the former in the financial year to 30 June 2012; and Tk10
billion (USD125 million) for women entrepreneurs in 2013.
 Bangladesh Bank has set the SME loan disbursement target at over
Tk1,00,000 crore through all the commercial banks in the current year
2015.
 The target is 16.35% higher than the earlier target of Tk89,000 crore for
the year 2014.
 The largest lender to SMEs by far is IBBL, followed by BRAC Bank.
Others with an SME focus include Sonali Bank, Eastern Bank and
Mutual Trust Bank (MTB)

22. Public Private partnership (PPP)

23. Domestic Philanthropy and NGOS

24. Remittance

25. Remittance
11.65
12.85
14.46 14.2313.87
0
2
4
6
8
10
12
14
16
FY
2011
FY
2012
FY
2013
FY
2014
FY
2015
(May)
Remittance US$ billion
0
100
200
300
400
500
600
700
800
FY
2011
FY
2012
FY
2013
FY
2014
FY
2015
April
No. of Workers Abroad
Remittance and Bangladesh expatriates are a key source of
investment since at present majority of the remittance is
used for consumption purpose, land acquisition and
construction of homes.

26. Investment Climate
Bangladesh is one of the top exporters of readymade
garments to US & Europe
Risk factors for FDI are the minimum in Bangladesh
Bangladesh never posted negative economic growth during
the past 30 years
Bangladesh has ‘never defaulted in its debt repayments, nor
asked for its rescheduling
Bangladesh has an open, market based economy led by a
vibrant and innovative private sector which provides the main
stimulus to its growth
Bangladesh is a homogeneous country with no religious,
ethnic or other forms of cultural conflicts
Bangladesh is one of the largest contributors to UN
peacekeeping forces and missions and the records of the forces
have been exemplary and laudable

27. Foreign Direct Investment (FDI)
Sustainable development can remove the poverty from the
society, in this regards foreign direct investment (FDI) plays a
vital role in sustainable development.
Many schools of thought emphasized on the flows of FDI could
fill the gap between desired investment and domestically
mobilized saving.
Additionally, FDI may help the host country to break out of the
vicious cycle of underdevelopment.
Many scholars widely believe that the benefits accrued from FDI
may include the acquisition of new technology, employment
creation, human capital development, contribution to
international trade integration, enhancing domestic
investment, and increasing tax revenue generated by FDI

28. FDI Policy Framework
The National Industrial Policy, 2010 of Bangladesh
recognizes:
a. Private sector is treated as the engine of growth
b. No upper ceiling for foreign investors or performance
requirements
c. 100% foreign equity is allowed
d. All industrial sectors are open for foreign investors for
investment except 4 reserve sectors for the government.
e. Equal treatment for both local and foreign investment
f. Export oriented industries are given top priority

29. Taxation n BD
Status Rate
Corporate Tax: (on net profit)
Publicly Traded Company 25%
Non-Publicly Traded Company 35%
Bank, Insurances, Financial Institutions (listed) 40%
Bank, Insurances, Financial Institutions (not listed) 42.5%
Merchant Banks 37.5%
Cell Phone Company (40% if listed ) 45%
Cigarette producing companies 45%
Personal taxes (Based on defined income slabs) 10%-25%

30. Recommendation
 Bangladesh has some individual
opportunity to develop its socio
economic infrastructure.
 Socio-Economic indicator is also very favorable of
Bangladesh.
 Both Official Development Assistance and FDI inflow of
Bangladesh are positive.
 Bangladesh Govt. has successfully implemented two
Poverty Reduction Strategy Paper.
 Bangladesh has been trying to reduce its poverty rate by its
own way. But if it has some other development assistance
from the out side it would be more fuel in this journey.
 Domestic and foreign investment area should be increased.

31. Reference
 World Bank Data
 Bangladesh Bank Database
 Ministry of Finance of Bangladesh
 Statista
 Aid flow Bangladesh
 https://sustainabledevelopment.un.org/?menu=1300