Foreign aid utilisation for dev projects crawling | The Daily Star
12:00 AM, November 19, 2019 / LAST MODIFIED: 10:22 AM, November 19, 2019

Foreign aid utilisation for dev projects crawling

Foreign aid utilisation in the annual development programme dropped 8.14 percent over the last four months although the government had set an ambitious target of spending from foreign sources.

Between the months of July and October, some Tk 7,637 crore was utilised, which is 10.64 percent of the foreign aid allocation for the fiscal year.

At this point last year, foreign aid utilisation was Tk 8,360 crore, which was 13.93 percent of total foreign aid allocation for fiscal 2018-19.

The government has targeted to spend Tk 71,800 crore or more than $8 billion from the foreign fund for ADP implementation this fiscal year.

Although foreign aid commitment rises every year, the government cannot spend much of it for ADP implementation. As a result, the amount of unutilised foreign aid is also increasing every year.

Foreign aid in the pipeline surged to a record $48.11 billion at the end of the last fiscal year in Bangladesh despite spending more of the committed money.

At the end of last fiscal year, fresh commitments amounted to $9.8 billion and $6.2 billion was used, the highest ever.

However, the amount fell short of the $7.5 billion spending target, according to data from the Economic Relations Division (ERD).

Between fiscal years 2012-13 and 2016-17, the government managed to spend between $3 billion and $3.6 billion of foreign aid a year. In fiscal 2017-18, the spending went up to $6.1 billion.

Despite this, lenders seem to be optimistic about Bangladesh, as evident in the growing foreign aid in the pipeline.

Ideally, the government should aim to use a fifth of the foreign aid in the pipeline at the beginning of a fiscal year, official sources said.

Last fiscal year began with $44.51 billion in the pipeline; meaning $8.9 billion should have been used. The government was not so optimistic and had set a target of spending $7.5 billion. But the target was missed too.

A senior finance ministry official said the amount of foreign aid has been increasing over the last few years because Russia, China, Japan and India have committed more funds to Bangladesh with a view to implementing the mega infrastructure projects in the country.  However, the implementation progress of the projects is still slow although those lending countries are ready to give a lot of funds to Bangladesh.

Delays in appointment of project staffers, contract approvals and revision of project design and costs are often blamed, the official said.

Weak capacity of implementing agencies, coordination issues with the planning commission, procurement delays and difficulties in managing the contractors further hinder implementation and slow down fund disbursement, he added. On the other hand, spending from the government-owned funds increased 50.14 percent year-on-year to Tk 22,222 crore during the first four months of the fiscal year, which is 16.97 percent of the total government allocation, according to data from the Implementation Monitoring and Evaluation Division.

Fund utilisation by the state-owned enterprises (SoEs) between July and October was also low, which is almost half of what they spent a year earlier. The SoEs could spend only Tk 794 crore, which is 6.4 percent of their allocation in the first four months of the fiscal year. A year earlier, it was Tk 1,704 crore, or 21.66 percent.

The total size of ADP for the current fiscal year has been fixed at Tk 215,114 crore. Of the amount, some Tk 30,652 crore, or 14.25 percent of the total allocation, has been spent so far. Last year, the percentage was 13.75 percent.

Of the total amount of the ADP, 15 ministries and divisions were allocated 81 percent. Out of them, only five could spend between 18 percent and 26 percent against their allocation. 

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