Reliance on external debts has introduced significant vulnerabilities to the Bangladesh economy, said Syed Yusuf Saadat, a research fellow at the Centre for Policy Dialogue, on Sunday.
He said, 鈥楩or Bangladesh external borrowing has played a crucial role in financing development projects. In recent years, Bangladesh has accumulated more external debts than in the first few decades following its independence, raising concerns about the country鈥檚 debt sustainability.鈥�
He made the comments at a webinar co-organised by the CPD and the Organisation for Economic Co-operation and Development on the day.
The event titled 鈥楲aunching of the Multilateral Development Finance 2024 Report鈥� highlighted the pressing need for reforms in the multilateral system.
The CPD said that the multilateral development system was facing significant challenges due to ongoing global financial architecture reforms, polycrisis and geopolitical shifts.
While multilateral development finance has seen substantial growth, reaching a record 61 per cent of official development assistance in 2022, core funding for long-term development goals has been in decline, it said.
Between 2010 and 2022, core contributions fell from 69 per cent to 58 per cent, with a shift towards earmarked funding.
This trend raises concerns that while immediate crises are being addressed, poverty reduction and debt support efforts for the poorest nations may be jeopardised due to decreasing concessional financing.
CPD executive director Fahmida Khatun emphasised the critical role of multilateral finance in sustainable development.
鈥楾he multilateral development finance system and multilateral development banks must expand their capabilities. This requires reform of both the system and MDBs themselves,鈥� she noted, pointing out the growing demand for development finance amid current global crises.
Keynote speaker Abdoulaye Fabregas, an economist from OECD鈥檚 development co-operation directorate, highlighted three major challenges for multilateral stakeholders.
Firstly, multilateral development finance is increasingly becoming the primary channel for ODA, with record contributions in 2022.
Secondly, while crises like the COVID pandemic and the Ukraine war have fuelled growth in crisis funding, long-term development issues risk being overlooked.
Thirdly, there is growing pressure to reform the multilateral system as new entities and reforms of MDBs continue to emerge.
Fabregas also underscored the need for stronger dialogue between traditional OECD donors and emerging non-traditional donors such as China.
鈥楾he rise of emerging donors introduces new opportunities but adds complexity and fragmentation to the system,鈥� he said.
Nisha Arunatilake, director of research at the Institute of Policy Studies of Sri Lanka, expressed concerns about the challenges of measuring the impact of development projects, especially in social sectors.
鈥業nterventions like changing unhealthy habits or social norms require long-term efforts. Their impacts may not be immediately apparent but remain crucial for sustainable development,鈥� she observed.