Internal resource mobilisation

Indeed, reducing our dependence on foreign assistance has been one of the success stories of the Bangladesh economy in recent years. The key statistic is that currently approximately 41% of the ADP is funded from internal resources, well below the 50% benchmark that would indicate excessive external dependence, and that this figure is continuing to come down.

The reason for this reduction in our dependency is that we have been able to raise more revenue internally and mobilise the resources thus raised in a more effective manner, and this is without question the direction in which the government should continue to move.

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There are a number of reasons why excessive dependence on external assistance is a poor idea. The first and foremost reason is simply one of national pride and sovereignty. As a practical matter, donors always insist on tying aid to conditionalities which may or may not be in the best interest of the country, and it is never desirable for a government to have its hands tied by conditions dictated from outside.

Simple rules of good governance suggest that the key to performance is accountability, and to the extent that donors are not really accountable to the Bangladeshi people, the fact that key policy decisions are effectively made by unelected and unaccountable bodies cannot be in our long term interests. In addition to this, dependence on foreign aid cushions both the public and the private sector from the discipline of the market which slows down the pace of needed reform.

But none of this is rocket science. That excessive dependence on foreign aid is unhealthy is something that even the donors acknowledge and caution against. As such, the recent trend towards reducing such dependency is to be applauded and encouraged. And, we hope, continued.