Bangladesh - Aid Dependence

Aid dependence

The World Bank has taken the lead in addressing some of the most deep-seated structural constraints in Bangladesh's economy by providing productive employment for those without assets, promoting economic opportunities for women, and addressing the social and economic inadequacies of education, health, nutrition, and population programs. Among aid projects were the Irrigation Management Programme, which supports drainage and flood control as well as the introduction of pumps and drills; support for maintenance of the nation's more than 43,000 primary schools (including repairs to existing buildings, additions to accommodate larger numbers of pupils, and construction of new schools where needed); and the 500,000-ton Ashuganj fertilizer complex, utilizing domestic natural gas, which came on stream in 1981. The World Bank has made loans to Bangladesh only from its "soft window," the International Development Association. These interest-free loans provide for a 10-year grace period before repayment of principal begins and a 40-year repayment schedule, with the addition of a service charge of 1.5 percent.

The Asian Development Bank was the second largest donor, after the International Development Association, to Bangladesh's development in the 1980s. As of the end of 1985, the Bank had approved 66 loans totaling US$1.8 billion. In 1985 alone, the bank approved loans of US$212.3 million for 6 new projects (down from US$306.8 million for 4 projects the year before). In addition, the bank provided local currency financing of US$59.8 million for 3 projects, cofinancing of US$10.5 million to projects with other donors, and a program loan of US$39 million for provision of fertilizer. About half of the Asian Development Bank's financing has gone to agriculture and agro-industry. The 1985 package, for example, included a livestock development project intended to increase food production and improve rural incomes through expansion of veterinary services and livestock nutrition. In 1987 the Asian Development Bank approved a technical assistance grant (cofinanced by the Norwegian government) to explore the feasibility of growing rubber trees commercially in Bangladesh. The Asian Development Bank also has been active in the development of natural gas. In 1987 the bank approved a US$74 million loan for construction and extension of natural gas transmission and distribution pipelines to 5 districts in eastern Bangladesh. The loan was intended to cover 71 percent of project costs, including all of the foreign exchange requirements for the project. The bank has also supported transportation projects (development and improvement of feeder roads between local markets and primary roads, inland waterways, and railroads) and social welfare schemes for population control, health, and education.

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