Japan has cut grant aid to Bangladesh by 50 per cent this year as it diverts the fund to Pakistan and Afghanistan to help them fight scourge of terrorism, officials said Monday.
The new Japanese government made the decision this month as part of its new foreign policy, dealing a blow to Bangladesh’s key infrastructure projects.
“The decision was taken to support the terrorism-hit countries,” said Tamaoki Watanabe, a Dhaka-based advisor of Japanese International Cooperation Agency (JICA).
Watanabe said Bangladesh would not be the only country to be affected by the new administration’s drastic cut in annual overseas development assistance.
“The Japanese government thinks Bangladesh and other nations like Cambodia are now capable to borrow loan from Tokyo and decided to divert grant to the needy nations,” Mr Watanabe said.
Japan has been the largest bilateral donor to Bangladesh, providing aid worth 13 billion dollars since 1973. A large chunk of the assistance was grant or donation.
Officials said the grant cut would mostly affect the transport sector in which Japan has been funding tens of millions of dollars of credit and donation every year.
In line with the new policy, Japan has already refused to fund a flyover at Moghbazar, despite JICA had made a commitment to bank-roll the project last year.
JICA had assured the government on several occasions to grant $40 million for the Moghbazar flyover. Its experts had conducted feasibility study of the project.
Officials said the decision is likely to hit the projects to which Tokyo has already made commitments, but not the projects for which Dhaka and Tokyo have struck deals.
A JICA official, however, said the Japanese government’s annual credit line and technical assistance “won’t be affected by the new foreign policy”. JICA lends and grants Dhaka around 300 million dollars every year. The amount could go up to 450 million dollars this year after Tokyo made commitment to fund the Padma Bridge and a metro rail in Dhaka.
Officials said the Japanese government previous pledge to finance construction of cyclone shelters and food silos is likely to be spared of the grant cut.
These are humanitarian projects,” said an official. JICA has assured Dhaka officials that despite the grant cut, Bangladesh would continue to be an important development partner of Japan. “Tokyo still considers Dhaka as a good friend and continues to support the country’s development projects,” Watanabe said.
High officials of the communication ministry and DTCB said the government is not worried about Tokyo’s major slash in grant aid.
“Already, we have taken steps to construct the Moghbazar flyover with our own money,” Dr. SM Saleh Uddin, a top DTCB official, said.
He said the Local Government Engineering Department has been directed to revive the flyover project and prepared a new design so that construction work can start by this year.