Foreign aid disbursement fell 20 percent in the first two months of the fiscal year from the same period a year earlier due to low development spending.

Between the months of July and August, foreign aid disbursement stood at $292.71 million.

A high disbursement target was set for this fiscal year, but in the first two months the ministries and divisions could spend only 6.71 percent of the amount.

The government's disbursement target in fiscal 2015-16 is $4.36 billion, up from $3.35 billion last fiscal year.

The low disbursement has been blamed on the slow pace of implementation of the Annual Development Programme, said an official of the Economic Relations Division.

In July-August, only 3 percent of the total ADP allocation was used, which is the lowest in three years.

Meanwhile, disbursement by the World Bank, which provides a large chunk of foreign aid to Bangladesh, increased about 65 percent year-on-year during the period.

The Washington-based multilateral lender dispatched $171.23 million in the first two months of the fiscal year.

The reason for the spike in disbursement is that the WB and the ERD have been closely monitoring the multilateral lender's projects portfolio over the last few years.

“That is why the disbursement increased in the beginning of the fiscal year,” the ERD official said.

Meanwhile, Finance Minister AMA Muhith held a meeting with Kyle Peters, senior vice-president of the WB, on the sidelines of the WB-International Monetary Fund annual meetings in Peru yesterday.  They discussed the WB's growing portfolio in Bangladesh, which in fiscal 2015-16 included new financing commitments of $1.9 billion and disbursements of almost $1 billion, according to a WB statement.

They also discussed the government's progress in various reforms, including those in areas of taxation, to improve the investment climate. The WB said if the reform programmes progress, it could be supported by a WB development policy operation.

On the government's proposed budget support of $500 million from the WB, Muhith said the amount may be $250 million now.

Bangladesh also gets substantial foreign aid from Asian Development Bank.

In the first two months of the fiscal year, ADB's disbursement almost halved from a year earlier to $43 million.

This fiscal year, Bangladesh has a target of getting $960 million to be disbursed from the ADB.

The total amount of foreign aid in the pipeline is $21.71 billion as of June this year.