17. In my view: Bangladesh will continue to champion effective international partnerships for inclusive and sustainable development
Bangladesh’s sustained economic growth, coupled with a sharp reduction in poverty, has grabbed the attention of global development narratives. For the last 14 years, we have been able to maintain a positive growth trajectory with tolerable inflation, sustainable public debt and resilience to external shocks. Bangladesh has made significant progress in the social sector characterised by universal child immunisation, reduced maternal mortality, increased longevity, gender parity in education, free housing for the landless and homeless, and women’s empowerment. The country is set to graduate from the United Nations’ least developed country status in 2026 and aspires to be an upper middle-income country by 2031.
This journey was not easy. This is a story of our people’s innate resilience and aspirations, and our government’s long-term vision matched with prudent policies. It is also a narrative of meaningful co-operation with the international community, including through development assistance. Foreign assistance has enabled critical investments in our thrust sectors like physical infrastructure, education, public health and social safety nets. In the last ten years, the average share of development support by foreign partners constituted 32.5% of our Annual Development Programme.
In the last ten years, the average share of development support by foreign partners constituted 32.5% of our Annual Development Programme.
The recent trend in foreign financing in Bangladesh is marked by a decline in the flow of grant and concessional resources from bilateral and multilateral sources. While the share of grant resources in official development assistance (ODA) in the mid-2000s was between 20% and 25%, it came down to 5% in FY 2020-21. As an emergency response to the COVID-19 pandemic, Bangladesh received budget support from international financial institutions and multilateral development banks on LIBOR-based variable rates for the procurement of vaccines, provision of health supplies and social sector programmes. We are now increasingly dealing with blended finance and scale-up facilities with floating interest rates in keeping with our categorisation by the World Bank as a lower middle-income country since 2015.
While the total debt burden of 31 emerging economies is at least 2.5 times their combined gross domestic product (GDP), Bangladesh’s debt-to-GDP ratio stood at only 32.4% of GDP at the end of FY 2021. This is well below the internationally recognised threshold for sustainable debt, and only 11.9% of the outlay comes from external sources. Debt sustainability analyses carried out by the World Bank and the International Monetary Fund suggest that “fiscal discipline has kept Bangladesh at a low risk of debt distress” (IMF, 2022[1]). However, the rising cost of borrowing is a concern for the country’s development outlook. It would be crucial for us to continue mobilising ODA, especially for our massive social sector programmes.
Climate change has emerged as one of the biggest threats to Bangladesh’s sustainable development. Extreme temperatures, erratic rainfall, flood and drought, even more intense tropical cyclones, sea-level rise, increasing salinity, riverbank erosion, etc. are causing severe negative impacts on the lives and livelihoods of millions of our people. Bangladesh is striving to move away from climate vulnerability to long-term sustainability and resilience. Significant public finance will be required to reduce the investment gap in the climate sector, especially for adaptation efforts. Developed nations’ support for a just transition would be critical in the coming days. We welcome the historic decision to create a “loss and damage” fund in COP27. However, the success of this fund will depend on how quickly it gets operationalised. Access to existing international climate funds also needs to be streamlined.
International development co-operation has seen a significant transformation in the past decade, making foreign assistance management a complex undertaking. Lack of synergies and complementarities between and among different financing mechanisms creates overlap and/or scarcity in critically needed investment areas. In order to respond to fast-changing and diverging financing models, there is a growing need for development co-operation support to build the capacity of the relevant public sector entities.
...to respond to fast-changing and diverging financing models, there is a growing need for development co-operation support to build the capacity of the relevant public sector entities.
Provisioning funds for project preparatory activities and subsequently adding that to project costs are needed to minimise project start-up delays. A standardised investment financing guideline and flexibility for necessary customisation within the local context are also essential.
Two and half years of the pandemic and nine months of Russia's war against Ukraine have exposed the vulnerabilities of the existing global supply chain and disrupted global food and energy markets. According to the United Nations, the COVID-19 pandemic has erased at least four years of progress in fighting poverty. It is projected that as many as 95 million people will again fall into extreme poverty in 2022 alone. Around 90 million people in the Global South can no longer afford to pay their energy bills.
In such a difficult situation, achieving the Sustainable Development Goals by 2030 will require affordable financing for the developing world. Innovative financing models and toolkits should be designed to channel harmonised foreign assistance, aligned with national goals and priorities. As the traditional voice of the world’s most vulnerable segments, Bangladesh would continue to remain a champion of effective international partnerships for inclusive and sustainable development.
Reference
[1] IMF (2022), Bangladesh: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Bangladesh, https://www.imf.org/en/Publications/CR/Issues/2022/03/07/Bangladesh-2021-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-513942.