Foreign aid hits new high
The amount of foreign aid available to the government to spend on development purposes reached a new height of $21.71 billion at the end of last fiscal year, boosted by higher commitments from development partners.
The foreign aid commitment stood at $5.21 billion in fiscal 2014-15, against the target of $6 billion. It was $5.84 billion a year earlier.
The World Bank, the largest donor, gave $1.01 billion in fiscal 2014-15, which was $930 million a year ago, while the Asian Development Bank disbursed $710 million, nearly twice the amount it gave a year ago.
The country has been receiving handsome amounts of foreign aid commitments in recent years but the absorption capacity of the ministries and divisions did not improve, leaving a huge stockpile.
Until fiscal 2009-10, the country received commitments worth $2 billion on average every year, but since fiscal 2011-12, it rose to upwards of $5 billion, according to statistics from the Economic Relations Division.
Economists say the government's ability to utilise aid has lagged behind its ability to negotiate new aid.
They cite the implementation capacity constraints of the line ministries for the wide discrepancy, adding that usual problems in land acquisition, resettlement, procurement, appointing project management and politicisation of tendering process continue to haunt project implementation.
Although the government has given some reasons for the difference, the explanation has been the same over the years.
The reasons include delays and allegation in bidding process, faulty project documentation, unrealistic requisition for fund allocation and delays in land acquisition.
But the development partners blame the tardiness while appointing consultants and awarding contracts for the mounting unused aid in the pipeline.
Some 62 percent of the delays were caused due to bottlenecks on the government's side and 19 percent due to the development partners; 12 percent were due to both government and development partners, and 7 percent were affected by outside causes like political unrest, according to an ERD report.
The tardy tendering and contract awarding processes jointly caused 26 percent of the delays.
Finance Minister AMA Muhith never shies away from admitting different ministries' failure in utilising the aid money. In April, he said the disbursement process became lengthy, as various procedures set by the donors have to be followed.
In practice, the amount is deposited in the pipeline and is ready for use right after the agreement is made with bilateral or multilateral donors.
“What actually happens is that we are not ready to use the amount right away,” he said.
The frequently changing project directors and the responsibility of a host of projects on each director also do not help matters.
Things are not all negative.
In recent years, the government and the development partners have found a way to boost fund disbursement in order to take the benefits of development efforts to the people.
Nowadays, the ERD, development partners and line ministries sit in a tripartite meeting regularly and discuss the barriers case by case to find out their remedies and expedite the implementation of projects.
Besides, Bangladesh has become one of the few countries in the world to set up a locally developed online aid information platform called Bangladesh Aid Information Management System (AIMS).
Launched in October last year, the web-based software application will help the country to track and manage its aid flows. AIMS is expected to play a key role in promoting effective development partnership, said ERD Secretary Mohammad Mejbahuddin.
“It must be remembered that enhancing aid transparency and ensuring better aid management are joint responsibilities of the government and the development partners and by working together we can move faster towards that goal.”
The government managed to hit its disbursement target of $3.01 billion last fiscal year, from $3 billion a year ago.
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