Rely less on foreign aid, raise own funds with revenue and resources: Governor

With foreign aid shrinking as a share of Gross Domestic Product (GDP), Bangladesh must raise more funds by strengthening revenue and resource mobilisation, Bangladesh Bank Governor Ahsan H Mansur said today (20 August).

"Dependent on foreign aid since 1970, we used to get foreign support of 12% to 14% of the GDP. Now that the percentage has come down, we have to generate our own [funding]. We have to enhance our resource mobilisation capacity, which is perfectly doable," he said while addressing an event at a hotel in Dhaka. 

Care Bangladesh, a humanitarian organisation fighting poverty, organised the event titled "The Next Frontier: Driving Development with Markets, Capital & Innovation."

Mansur said, "Bangladesh is not doing a good job in terms of revenue collection, and we need to focus on that very constructively. Some initiatives are being taken by the government.

"However, we have seen the fallout of the strike of the National Board of Revenue officials. They basically wanted to maintain their status, but the status quo is not an option. We have to break out of it for more revenue generation. If India can generate 18-20% of GDP, Nepal can generate more than 20%, why should we remain stuck?" 

Foreign financing does not have to be overseas direct investment (ODI), and it can be foreign funding in the private sector. So, Bangladesh has huge potential in terms of accessing the private capital market, he said, adding that the government is making efforts to develop the financial sector in multiple ways.

"The first and foremost matter of consideration is price stability. Without that, nothing can be achieved. Financial sector stability is the second, which is significantly threatened," Mansur said.

"We all know our state of development, the precarious condition of the financial sector, particularly the banking sector, and we have to stabilise it. So, we have a detailed plan and a phased-out plan which would take 3-4 years, but it can be done and shall be done hopefully," said the governor.

"The third most important point of consideration consists of new innovations and financial education. We are working on it," he said.

Transparency in borrowing is being increased, and efforts are underway to reach out to the unbanked communities in multiple channels, Mansur said.

The banking sector has now expanded to the rural areas through agent banking, he said. "We are going for mobile financial services, and the nano loan concept is being popularised now. Every day, 4,000 nano loans are being granted, and some Tk7,000 crore has already been granted without any physical contact through the mobile apps of Bkash."