The Asian Development Bank (ADB), in its recent report, has termed Bangladesh as having the worst infrastructure facilities, third only to Nepal and Mangolia.
The report states that Bangladesh’s physical infrastructure such as transport, communication, sewage, water, and energy are in dire state. Moreover, the country’s growing urbanization in recent years has generated demands for physical infrastructure but owing to financial constraints, Bangladesh could not achieve much progress in infrastructural development.
Economists believe that Bangladesh can meet its infrastructural financing through a number of ways such as utilizing external and internal resources, domestic savings, and foreign exchange reserves. Economists are of the view that Bangladesh should use its foreign exchange reserves to meet its infrastructure costs. However, according to some estimates, the country needs nearly $35 billion of infrastructure investment in the next five years.
Analysts believe that since Bangladesh has scarce domestic savings and a shallow domestic financial market, it ought to explore external resources to finance infrastructure. This is because the country’s growth of saving rates and development of financial markets correlate with its income level. The ADB report observes that foreign investments bring special types of risk to the country because of their long development time, currency exposure, political risks, likelihood of cancellation, and possible underutilization.