Govt to cut foreign fund spend 17.5pc

The government plans to reduce foreign fund spending by 17.5 percent in the revised ADP for 2016-17 although the unused money in the pipeline has reached a new high of $35.44 billion.

The planning ministry will place the revised annual development programme at a meeting of the National Economic Council tomorrow.

A proposal to cut the revised ADP allocation by 5.87 percent to Tk 104,200 crore from the original outlay will also be placed at the meeting, according to a ministry official.

Of the amount, Tk 71,200 crore will come from the government's own fund, which is 0.71 percent or Tk 500 crore higher than the original amount.

However, the project aid has been proposed at Tk 33,000 crore which is Tk 7,000 crore less than the original amount.

Unused foreign aid in the pipeline was $22.24 billion on June 30 last year, which rose to $35.44 billion in January, according to statistics from the Economic Relations Division. 

In the first seven months of the current fiscal year, $14.66 billion was received in new commitments, while $1.46 billion was disbursed and $13.2 billion remained unused.

In July last year, Bangladesh signed a loan agreement with Russia to obtain $11.38 billion for Rooppur Nuclear Power Plant.

Due to the Russian loans, the credit in the pipeline has reached such a high level and the amount will be spent until 2024 as per the project implementation schedule.

In many cases, the implementation is delayed due to lapses on both the sides -- the implementing agency and the development partner.

Last fiscal year, $3.42 billion was disbursed in foreign aid, which is more than the revised target.

The scope to increase disbursement depends a lot on the efficiency of the implementing agency, the ERD official said.

The implementation of many of the large donor-funded projects was slowed due to the militant attack in Dhaka at the beginning of the current fiscal year, the planning ministry official said.

It also contributed to the less utilisation of foreign aid then, according to the official.

Prime Minister Sheikh Hasina has increased the local fund over their proposed amount in the face of demands from the ministries and the divisions, the official said.

Of the total allocation, the transport sector received 24.34 percent, infrastructure, water supply and housing sectors got 13.41 percent and education and religious affairs 12.20 percent.

The power sector has got 11.85 percent of the allocation while rural development and rural institutions 9.55 percent, science and ICT 5.25 percent, agriculture 4.97 percent and health 4.76 percent.

Meanwhile, development allocation for the state-owned enterprises is being slashed hugely in the revised ADP.

The planning ministry has proposed to earmark Tk 8.595 crore for state owned enterprises in the revised ADP which would be 32 percent less than the original amount.