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After the independence of Bangladesh, it was widely believed that once reconstruction tasks were over, the domestic economy would provide most of the resources needed for development. This view was mistaken because systematic drainage of Bangladesh’s resources during the British and Pakistani colonial regimes, which had left it with a deficit in food grain availability. Low levels of internal savings and a high population living below poverty line were evident: what in other words could be called a state of chronic external dependence. The country has followed the course of planned development since 1973. In a medium term framework, the First Five Year Plan was launched in July 1973. This was followed by a Two Year Plan (1978‐80) in the background of world‐wide inflation and uncertainties. In 1980, the five year plan framework was reinstated and since then three five year plans were implemented in succession. There was no development plan during 1995‐97 after the expiry of the Fourth Plan (1990‐95). Every plan targeted at an average annual GDP growth rate of above 5 per cent but achieved about 4 per cent. In spite of large inflow of foreign assistance to augment meager domestic resources, the planned effort for development has not been able to free the economy from the low growth trap. Almost half of the population of Bangladesh still continues to eke out an existence below poverty line with very little access to the basic amenities of life. Every Plan targeted for an average annual growth rate of above 5 percent. Despite a large flow of foreign assistance, the planned effort has not been able to get away from the low growth trap as half the population of Bangladesh still continues to live below poverty line. The summarized version of planned development effort is given below: (in million Taka) Plan Total Amount Total Amount Total Amount Growth (Public) (Private) Target (%) 39,520 32,610 111,000 250,000 347,000 858,939 5,030 6,000 61,000 136,000 273,000 1100,582 5.50 5.60 5.40 5.40 5.00 7.00 Realized Growth (%) 4.00 3.50 3.80 3.80 4.15 5.50
First Five Year 44,550 Plan Two Year Plan 38,610 Second Five 172,000 Year Plan Third Five 386,000 Year Plan Fourth Five 620,000 Year Plan Fifth Five Year 1959,521 Plan
15% (short of the 5% target). Historically. Bangladesh's first five‐year plan (1973–78) aimed to increase economic growth by 5.4% and 14. also fell short of its projected growth target. much of the domestic borrowing was being used to cover recurrent expenses such as wage and salary increases.4%. in 2000 and 2001 respectively.9% and 5%.1%. Exports grew 14% 1996. The third five‐year plan (1985–90) had a5. Political turmoil from 1994 to 1996 helped reduce the final average annual growth rate under the Fourth Five Year Plan (1990–1995) to 4. government revenue improvement efforts (realized largely through implementation of a value‐added‐tax). In 1991. which targeted 7. The revenue to GDP ratio rose in 2001 from 8. rural development. but this improvement was more than offset by expenditure to GDP ratios of 14. and tight monetary policy. and increased industrial production. progress in achieving development goals has been slow. The drain on foreign reserves from . a new economic program was initiated that included financial sector reform and liberalization measures to encourage investment. Floods during 1998 and 1999 caused some economic slowdown but this was balanced by unprecedented growth in gas production and electricity production sectors. according to the IMF. Income transfer measures. Bangladesh has received foreign aid disbursements equivalent to about 6% of GDP. self‐sufficiency in food. The 1996 elections brought renewed economic stability. A special two‐year plan (1978–80). Fiscal year 2000 was marked by a sharp increase in monetary expansion due to unprecedented borrowing from the banking sector (though the sale of treasury bills) to cover budget shortfalls due. and other programs were also implemented to help protect the poorest segments of the population from the transitional effects of structural reform. have lately declined to amount equaling 3–4% GDP.8% was actually achieved. and GDP growth for 1996/97 rose to 5.4% annual growth target though only 3. Political turmoil and untamed natural hazards of cyclone and flooding have combined with external economic shocks to persistently derail economic plans. stressing rural development. Domestic borrowing increased primarily due to the reduced availability of external concessional financing. creating budget deficits amounting to 5. However.2% annual growth.3%. albeit the best performance so far under an economic plan.5% annually. but actual growth averaged only 4% per year. Food‐for‐Work. with the reinstitution of elected government. as did the second five‐ year plan (1980–85).The major objectives of planned development have been increased national income. Moreover. Average annual GDP growth under the Fourth Five‐Year Plan rose to 5.5% to 9.5% as the economy rebounded.
Despite continued financial assistance by the Development partners a vast majority of world population in the recipient countries live under the poverty line and unable to meet their basic needs.5% due to the global economic slowdown and the contractions after the terrorist attacks of 11 September 2001 on the United States. . which are officially termed as ‘Development Partner’. and Why” has laid emphasis on the internal policies of the recipient countries as important factors to make aid effective. The international financial agencies more than ever the World Bank and International Monetary Fund as policy shift pursued a free‐market‐based world order where the developing countries were urged. and before making any aid commitment want to make it sure that appropriate policy environment is prevailing in the recipient countries. The Role of Donor Agency in Flourishing the Economy of Developing Countries Like Bangladesh There is no denying the fact that embryonic countries constantly demonstrate a predisposition to bring in the policy pronouncement of highly developed countries in their delicate resources despite the shifting of overall socio‐economic procedure virtually. In different international forums including the Aid Consortium Meeting that held under the auspices of the World Bank. over the last one‐decade developing countries have made changes in their state oriented development strategy mostly in line with the policy advice of the Development Partners.domestic borrowing contributed to reducing the foreign exchange cover for imports to imprudent levels of two months in 2000 and one‐anda‐half months in 2001. the Development partners review the policy issues of the recipient countries with top priority. The intact process is now more evident in an interestingly univocal world order that materialize after the collapse of communism as a governing and economic system in the 1980s. The highly developed countries make available financial assistance for the economic development of the developing countries through unusual multilateral and bilateral donor agencies. In bona fide world state of affairs aspects that next to influence the strategy decisions of budding countries are found fictional in progressive countries. The ‘Development Partner’ all the way through their lending tricks play a vital role in the policy‐ making method of developing countries. As a result. cajoled and hard‐pressed to initiate market economy through structural modification reforms. the IMF predicted a sharp decline to around 3. What doesn’t. For 2001/02. It is evident that reserve constraints and technical non‐progressive phenomena are two focal setting that formulate the budding countries reliant upon the advanced countries. Although the failure of IMF’s policy advice in managing the financial crisis in East Asia has given rise counter argument that the economic crisis afflicting the developing countries was fundamentally global in nature The World Bank in its policy research report. What works. “Assessing Aid. however. Increasingly Development partners are becoming concerned with the aid effectiveness and often attribute the underdevelopment of third world countries to their inappropriate internal policies. Development Partners tend to justify their role in policy decisions of recipient countries that aids are given from the taxpayers’ money of the advanced countries who preserve the right to know whether money is being utilized in proper ways.
McNamara was the First WORLD BANK president visited Bangladesh in the year 1972 to assess the aid requirement of the war devastated country.articlesbase. Initially the Bank’s approach was more humanitarian. the Bank expanded support for more energy projects and helped to reduce the country’s dependence on imported energy. Since early 1990s the Bank and other Development partners by keeping pace with the global change pushed the government for allowing more private sector participation in the public sector management and diverted the aid flow for the social sectors like health and education. The dispute that emerged between the Bank and GOB was the issue of the Bangladesh’s share of debt liability. which was launched in 1973. which was held in Dhaka in March 1973. The WORLD BANK as an important single source of aid to Bangladesh co‐ordinate the Aid Consortium for Bangladesh. In the subsequent years. which have direct impact on poverty alleviation. the Bank worked closely with others to revive the war‐torn country’s economy. Read more: http://www. Till September 1998. But dependence upon the external aid left very little option for the government of the newly independent country to reject the Bank’s conditional lending offer. The creation of the Bangladesh Aid Consortium has institutionalized the leadership of the World Bank. As a result. The WORLD BANK has been working in Bangladesh since 1972. and to develop population and family planning programs that have dramatically lowered the high fertility rates. The then highly nationalistic government that led to the liberation of the country from occupying Pakistani forces was very much critical about the Bank’s close allies with the Pakistani regime. the GOB had to accept conditional external assistance to implement the first five‐year plan.html#ixzz1GXv2cvAG Under Creative Commons License: Attribution . and. completed before independence and physically located in the territory of the erstwhile East Pakistan. Bank loans of more than $2. Early projects financed by the Bank were cyclone shelters built in the coastal areas of the country. Robert D.05 billion fund 21 projects in Bangladesh (The World Bank. In the early years. Since 1972 the Bank’s concessional lending arm. GOB declined to take the responsibility of debts taken by the erstwhile Pakistan government from different bilateral and multilateral donor agencies/countries. conducts detailed research on different aspects of Bangladesh’s economy. After long parley the then government had accepted an inherited debt liability of $483 million against the projects.com/online‐promotion‐articles/the‐role‐of‐donor‐agency‐in‐ flourishing‐the‐economy‐of‐developing‐countries‐like‐bangladesh‐457740. Domestic resources that were available to the economy found inadequate to implement the development projects. the Bank exerted pressure upon the government to come to a solution on the debt issue.Among the Development partners the World Bank (WORLD BANK) is the most important whose confessional financial assistance has allowed it enormous access in the policy making process of developing countries which we can see with particular reference to Bangladesh. which have helped Bangladesh achieve a self‐sufficient food supply.2 billion. dependence of the country on the mobilisation and influx of foreign funds into Bangladesh for financing not only the development projects but also the import of food items and essential commodities has become more institutionalized. The process through which Bangladesh resolved it’s past debt liability was viewed as highly instructive and mentioned as a glaring example of the Bank’s pressure on Bangladesh. the Bank supported efforts to expand agricultural production. The resident mission of the WORLD BANK. which is the largest in Bangladesh. 1998). has financed more than 167 operations with loans of about $8. soon after the Independence. the International Development Association (IDA). In the First Aid Consortium meeting of donor countries. despite the Bank’s controversial role in the liberation struggle. From the mid‐1980s.
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