"The relative large increasing amount of uncommitted loan funds indicates slow and declining project implementation performance and loan savings available for cancellation or reallocation," says an Aide- Memoire of the Asian Development Bank.

The blame for declining contract and loan disbursement from the bank mainly goes to delays in seven projects in entities such as power, road and forestry, including Sundarban Biodiversity Conservation Project, suspended since September 4, 2003.

According to the Aide-Memoire, prepared by ADB's country portfolio review mission (CPRM) jointly with World Bank and JBIC (Japan Bank for International Co-operation), $1,720 million was un-disbursed and $ 1,588 million uncommitted against the funding agency's total net loan amount of $ 2,233 million until December 31, 2003.

The reminder, submitted to the government, said award ratio worsened from 18.1 percent in December 2002 to 11.4 percent in December 2003, which compares unfavorably with the ADB average of 13.7 percent.

Similarly, the disbursement ratio, excluding programme loan, declined from 21.8 percent in 1999 to 15.8 percent in 2003, which was well below the ADB average of 20.2 percent and the second lowest among all ADB's development-member countries.

"The declining contract and loan disbursement performance were mainly due to inordinate delays by several entities in the energy sector, specially Desa, the road sector and the forestry sector; unrealistic projections for some projects and in some cases slow response time by ADB."

The CPRM that worked from February 15-March 18 to prepare the report noted with great concern that Desa has had 13 contracts pending between one to two years, which had adversely affected project implementation performance under Dhaka Power System Upgrade Project.

On delays in credit effectiveness, during 2003 the average time elapsed from the dates of loan signing to loan effectiveness increased from 6 months in December 2002 to 6.6 months in December 2003. Five ADB loans in education, road, power and livestock sectors await loan effectiveness.

Also, the Aide-Memoire said, long delays in recruitment of consultants remain to be a major concern, adversely affecting start-up performance of projects. The average time elapsed from loan approval to award of first consultant contract under a project was about 15.8 months during the last two years.

"Another key constraint is the delays in connection with the government's preparation and approval of project concept paper (PCP), project proforma (PP) and technical assistance proforma (TAPP)," it said.

For ADB-financed projects, the time taken to obtain PCP and PP approvals ranges between 6 months and 12 months. Delays occur at executive agencies, ministries and Planning Commission, both with respect to formatting and substance.

"However, other important issues also need to be addressed, especially excessive centralisation of decision making, excessive number of under-funded projects, uneven quality of projects and lack of concern/ capacity to consider and measure results."

The government, to address the constraint, is reviewing the PCP/PP process and documentation with a view to simplifying the procedures.

On project performance ratings (PPR), the ADB Aide-Memoire says overall, the PPR of Bangladesh loan portfolio largely follows the loan portfolio for South Asia and ADB average. However, it mentioned long delays in forestry-sector projects that resulted in large amounts of unutilized funds.