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Foreign Aid: A Review

Annesha Zeheen

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Introduction

When a new child comes to your

family,

All of you are happy, we want topresent her/him something

But the child is not happy, because

S/he comes with a debt burden of

USD156 (Tk. 12500)

A burden that makes his/her future

dark.

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Receipts of Foreign Aid

(USD mio): History

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Steps to Foreign Aid

Opening Pipeline

Pledges

Commitment

Disbursement

Closing Pipeline

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There is always gap between

Commitment and Disbursement

0

500

10001500

2000

2500

3000

3500

4000

4500

5000

FY

72

FY

74

FY

76

FY

78

FY

80

FY

82

FY

84

FY

86

FY

88

FY

90

FY

92

FY

94

FY

96

FY

98

FY

00

FY

02

FY

04

FY

06

FY

08

FY

10

FY

12

Commitment

Disbursement

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Reasons for the Gap

Problems with donor countries

Local currency issue

Less Utilization

Conditionalities

Other poverty stricken countries urgency

Geo-political

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Types of Foreign Aid

According to Source

Bilateral

Multilateral (Suppliers Credit)

Explanation of the sources

Characteristics of BilateralMultilateral

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Important Bilateral Donors

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Types of Foreign Aid

According to

Grant

Conditional Non-conditional

Loans

Concessional

Non Concessional

(What is grant element?)

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Percentage Share of Grants to

Total

010

20

30

40

5060

70

80

90Grant

Loans (concessional)

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Types of Foreign Aid

According to Purpose

Food Aid

Commodity Aid

Project Aid

(Budget Support)

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Characteristics of Food Aid

Counterpart Funds

Weather Hazards

Competitive Recipients

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Food Aid: Historical

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Commodity and Project Aid

Stories of Commodity Aid and

conditionalities

Our preference is for Project Aid

Utilization of Project Aid

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Disbursement of Commodity and

Project Aid

0

500

1000

1500

2000

2500

197

1/72

197

3/74

197

5/76

197

7/78

197

9/80

198

1/82

198

3/84

198

5/86

198

7/88

198

9/90

199

1/92

199

3/94

199

5/96

199

7/98

199

9/00

200

1/02

200

3/04

200

5/06

200

7/08

200

9/10

201

1/12

Commodity Project

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Debt Servicing

Bangladesh has no debt crisis

Bangladesh never but once failed to service

debt.

Debt and services are still at manageable

level.

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Debt and Debt Service

0

500

1000

1500

2000

2500

3000

0

5000

10000

15000

20000

25000

FY

72

FY

74

FY

76

FY

78

FY

80

FY

82

FY

84

FY

86

FY

88

FY

90

FY

92

FY

94

FY

96

FY

98

FY

00

FY

02

FY

04

FY

06

FY

08

FY

10

FY

12

Debt Outstanding

Total Debt Service

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Debt Service Ratio

0

5

10

15

20

25

30

35

FY

72

FY

74

FY

76

FY

78

FY

80

FY

82

FY

84

FY

86

FY

88

FY

90

FY

92

FY

94

FY

96

FY

98

FY

00

FY

02

FY

04

FY

06

FY

08

FY

10

FY

12

Debt Service % of Exports

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Growth and Aid in Bangladesh

Study by Rehman Sobhan

When there is 1% decline in aid, domestic

resource mobilization increases by about 1

percent.