Historical data on the flow of External Resources in Bangladesh and its debt sustainability issues are discussed.

1. Flow of External Resources in Bangladesh
Dr. –ing. Md. Taibur Rahman
Director (Joint Secretary)
Implementation Monitoring & Evaluation Division (IMED)
Ministry of Planning, Government of Bangladesh
trsumon@gmail.com

2. Importance of Foreign Aid/Loan
• Harrod-Domar Model: The Harrod-Domar economic growth model stresses the importance
of savings and investment as key determinants of growth. The model was developed
independently by Roy F. Harrod in 1939, and Evsey Domar in 1946.
• Basic Harrod-Domar model says:
Rate of growth of GDP = Savings ratio / capital output ratio
• Based on the model therefore the rate of growth in an economy can be increased in one of
two ways:
• Increased level of savings in the economy (i.e. gross national savings as a % of GDP)
• Reducing the capital output ratio (i.e. increasing the quality / productivity of capital inputs).
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 2

3. Importance of Foreign Aid/Loan……..
• Two-gap (dual gap) Model: Savings-Investment- gap and
export-import gap.
Foreign capital (both in the form of foreign aid or borrowed
funds) can play an important role in supplementing domestic
resources in order to relieve both domestic saving constraint
and foreign exchange constraint. Therefore, this was called dual
gap analysis of foreign assistance by Chenery and Strout (1966).
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 3

4. Importance of Foreign Aid/Loan……
• Requirement of Foreign Exchange
• Technology Transfer
• In general, aid is found to have a positive impact on economic
growth through several mechanisms
(i) aid increases investment
(ii) aid increases the capacity to import capital goods or technology
(iii) aid increases the capital productivity and promotes endogenous technical
change.
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 4

5. Importance of Foreign Aid/Loan
Annual Budget; FY22-23 (in crore BDT)
Total Outlay= 6,78,064
Operating Expenditure= 4,11,406
Development Expenditure= 2,59,617
 ADP= 2,46,066
Revenue Income (including Grants)= 4,36,271
Overall Deficit (Excluding Grant)=2,45,064
Budget Deficit=5.5% of GDP
Around 3.0% will come from foreign aid/loan (including grant)
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 5

6. Types of Aid
• COMMODITY AID (CA):- The provision of aid for the acquisition of intermediate inputs
and raw materials. Includes programme credits. Includes edible oil and fertilizer.
Excludes commodities acquired under project aid. Generally, generates counterpart
funds through sale of commodities which are used as local resources in implementation
of projects listed in the Annual Development Programme.
• FOOD AID (FA):- The provision for human consumption, of grants and loans for food or
for the purchase of food. Associate costs such as transport, storage, distribution, etc. are
also included. Excludes edible oil and fertilizer. Generally, this type of aid is not in the
form of cash.
• PROJECT AID: External resources both in terms of grants and loans for the financing of
projects. Relates to a large extent to the financing of projects included in the Annual
Development Programme. Also finances commodity imports related to the projects; this
commodity component is excluded from Commodity Aid.
• BUDGET SUPPORT: It is un-earmarked contributions to the government budget
including funding to support the implementation of macroeconomic reforms (structural
adjustment programmes, poverty reduction strategies etc.). Budget support is a method
of financing a recipient country’s budget through a transfer of resources from an
external financing agency to the recipient government’s national treasury. The funds
thus transferred are managed in accordance with the recipient’s budgetary procedures.
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 6

7. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 7

8. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED
8

9. Foreaign Aid to BD (In million USD) up to June 2022
Purpose Commitment Disbursement
Grant Loan Total Grant Loan Total
Food Aid 6139.31 762.557 6901.87 6199.49 762.55 6962.05
Commodity Aid 5696.45 5376.02 11072.47 5650.83 5257.00 10,907.84
Project Aid &
Budget Support
22740.57 128773.93 151,514.5 16866.26 76,642.39 93,508.64
Total 34,576.33 134,912.51 169,488.84 28,716.58 82,661.95 111,378.53
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 9

10. Commitment vs Disbursement
(FY1972-FY2022) (In Million USD)
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 10

11. External Resource: Commitment
 Achieved commitments of over USD 8 billion in last five FYs consecutively. In FY 2022 commitment was
8.2 billion.
 During the last 5 FYs USD 52.08 billion has been committed which is over 10 billion (24%) higher than
that of previous 5 FYs
5968.63
4764.52
5854.615844.22
5258.46
7048
17960
14974
9906 9554 9442
8205
-50%
0%
50%
100%
150%
200%
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
In
Percentage
Million
US
$
Commitment Rate of increase/decrease compared to last year
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 11

12. External Resource: Disbursement
 Recorded the highest disbursement (USD over 10 billion) in FY 2022 since independence
 From FY 2018 to FY 2022 yearly average disbursement was USD 7.63 billion which was USD 3.24 billon
from FY 2013 to FY 2017
1777
2126
2811
3084 3043
3563 3677
6369 6542
7272
7957
10008
-4000%
-2000%
0%
2000%
4000%
6000%
8000%
0
2000
4000
6000
8000
10000
12000
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Rate
of
increase
as
per
FY
Million
US
$
Disbursement Rate of increased/decreased compared to last year
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 12

13. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 13

14. Disbursements of 10 Major Development Partners
(FY1972-FY2022) (In Million USD)
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 14

15. ১০৭০০.০০
(50%)
১২৯৯০.০০
(56%)
২৩৬০০.০০
(39%)
৫২০৫০.০০
(33.03%)
৬৩০০০.০০
(30.10%)
১০৮০০.০০
(50%)
১০০১০.০০
(44%)
৩৬৫০০.০০
(61%)
১০৫৫৪৪.৩৯
(66.97%)
১৪৬২৭১.৯৪
(69.90%)
2005-06 2008-09 2013-14 2017-18 ২০20-21
প্রকল্প সহায়তা অভ্যন্তরীণ সম্পদ
(ককাটি টাকায়)
এডিডি বাস্তবায়নে সম্পনদর উৎস: অভ্যন্তরীণ ও ববনদডিক

16. Utilization of Project Aid
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 16

17. Net Flow of External Loan
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 17

18. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 18

19. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 19

20. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 20

21. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 21

22. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 22

23. ২০২০-২১ অর্থবছনর এডিডির ১৭ টি খাতডভ্ডিক (বতথমানে ১৫টি খাত) বরাদ্দ
24.28%
13.82%
12.30%
11.75%
8.75%
7.13%
5.55%
3.73%
3.21%
2.72%
1.62%
1.41%
0.90%
0.43%
0.26%
0.23%
0.12%
এডিডি বরাদ্দের হার

24. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 24

25. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 25

26. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 26

27. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 27

28. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 28

29. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 29

30. External Debt: Compositions
DP Debt Outstanding as on
30th June 2021
France/AFD 294.83
Japan 9,077.62
Russia 2,772.3
South Korea 650.44
Denmark 27.31
Germany/KFW 54.81
Kuwait/KFAED 175.96
Saudi
Arabia/SFD 113.65
U.A.E. 41.89
China (ODA)
Buyers’ Credit
2083.13
1894.19
India 740.73
DP Debt Outstanding
as on 30th June 2021
A.D.B. 11668
I.D.A. 18300
I.D.B. 600
I.F.A.D. 515
O.P.E.C. 184.42
EIB 170.6
AIIB 433.36
In Million USD
Total: 50,880 Million USD
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 30

31. Debt Liabilities to Major Development Partners
(As of 30 June 2021)
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 31

32. Debt Outstanding by Currency (As of 30 June 2021)
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 32

33. External Debt Composition
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 33

34. External Debt: Servicing
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 34

35. Risk Analysis
• Around 87.53% of the total external debt is derived from Medium- and Long-
Term loan and most of the loans are mobilized under fixed term interest rate
basis. Therefore, the risks of existing external debt portfolio is minimized
considering that our portfolio is exposed mainly to exchange rate fluctuation
and, minimally, to interest rate change.
• Foreign Currency Risk:
• The total government medium- and long-term external debt stock increased to
US$ 55.602 billion as on 30th June 2022 from US$ 50.880 billion as on 30th June
2021, indicating an increase of US$ 4.722 billion during the year.
• However, net government external borrowing during the same period stood at
US$ 8.768 billion.
• Episodes of appreciation of US dollar against SDR and against other currencies
were frequent during the year (parity variance).
• This parity variance recorded a decrease of US$ 4.039 billion to the debt stock in
US dollar during the year.
• Due to above situations, the actual expenditure of debt servicing in Taka was
considerably less than the budget provision. An amount of Taka 13,166.26 crore
and Taka 4,224.42 crore paid as principal and interest respectively against the
budget provision of Taka 14,792 crore and Taka 6,243.60 crore which made an
under expenditure of Taka 3,646.82 crore in total for the government.
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 35

36. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 36

37. Liquidity Risk: Historical Trend of Debt Sustainability
Analysis within DSA
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 37

38. Liquidity Risk: External Debt Sustainability
Despite phenomenal increase of external debt, Bangladesh has been comfortably servicing its debt with
an impeccable reputation of ‘non-defaulting party’ because of the prudent borrowing policy pursued
by the government. The Economist recently ranked a list of 66 emerging stable economies according to
four measures of financial strengths including public debt as a percentage of GDP, total foreign debt,
costs of borrowing and Bangladesh was ranked 9th from the top.
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 38

39. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 39
Liquidity Risk:……….

40. By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 40
Liquidity Risk:……….

41. Debt Risk: Redemption Profile
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 41

42. Reserves
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22
Recent Trend of Foreign Exchange Reserve
(in million USD)
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 42

43. Reference and Acknowledgment
• Economic Relations Division (ERD), February, 2023, Flow of External
Resources into Bangladesh 2021-2022
• LightCastle Partners, Bangladesh Donor Funding Outlook: Growing
Economy & Evolving Development Landscape
Note: This document is a mere presentation of the data and opinions expressed
within the content (if any) are solely the author's personal and do not reflect the
opinions and beliefs of the GoB or its affiliates
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 43

44. Thanks
By Dr. –ing. Md. Taibur Rahman,Joint Secretary), IMED 44