Country Report Bangladesh January 1996 Main report

Aid & Development: The aid consortium meeting is postponed to July--

In mid-December the World Bank announced that the 1996 meeting of the Bangladesh aid consortium of international agencies and donor countries was to be put back from its usual time, at the end of April, to July. This postponement was due to the impending general election and is intended to give the incoming Bangladeshi government time to prepare its position for the meeting. Some commentators thought that the change in the date might in fact cause difficulties for the government, since it traditionally presents its budget to parliament in mid-June, but a government official denied that this was the case.

More worrying was the warning by the World Bank's representative in Dhaka, Pierre Landell Mills, that the country's longrunning political crisis could scare off potential donors. Foreign direct investment has already been holding off: in the last fiscal year inflows were a meagre $20m and no recovery is to be expected until the political deadlock has been resolved. The failure to implement reforms in the state-owned jute sector or to press ahead with the privatisation of the telecommunications sector has caused donors to delay the release of some aid funds. However, as long as the government takes up these programmes again soon after the election, their funding should not be a problem.

--when aid commitments are likely to level out

The expectation is that commitments by the aid club in July will be broadly the same as in April 1995, when they were $1.95bn, slightly down on the year- earlier level of $2.1bn. Mr Landell-Mills has warned that a lower level of aid pledges may be expected in 1997, as donors foresee an increase in foreign direct investment once the current political impasse is solved, which would reduce the aid requirement.

Meanwhile, although foreign aid disbursement is reported to have fallen during the first five months of fiscal 1995/96 to $490m, down from $642m in the year-earlier period, over the full year it is expected to be similar to that in 1994/95 ($1.6bn) as government agencies present their bills for disburse-ments made.

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