Govt plans ambitious aid use target

The government plans to set an ambitious target of using foreign aid worth Tk 88,024 crore for development projects in the next fiscal year as external assistance has piled up.     

The amount is equivalent to $10.35 billion and up 39.72 per cent from the annual development programme (ADP) in the outgoing fiscal year.

Development partners have also indicated that they would inject more funds to help Bangladesh recover from the pandemic-induced slowdown quickly.

The total size of the ADP may be fixed at Tk 225,124 crore in the next fiscal year of 2021-22, up from the revised ADP of Tk 197,643 crore.

An official of the planning ministry said they were already informed about the ceiling of the allocation by the finance ministry. Based on the ceiling, the planning ministry was formulating the next ADP.

The next ADP would be finalised by the first week of May, and it would be placed before the National Economic Council for approval.

An official at the finance ministry said the government was looking to increase the allocation of foreign aid in the upcoming ADP as the country was sitting on a huge amount of unused foreign aid.

He said the government could use as much foreign aid as possible as borrowing costs were very low.

The country began receiving a higher flow of budget support from development lenders since FY20 to ride out the coronavirus pandemic.

At the beginning of the current fiscal year, $50.39 billion in foreign aid was available for the government, the highest on record.

The amount kept ballooning as more funds flowed in from the development lenders.

The Asian Development Bank (ADB) has already provided $650 million in loans and $7.23 million in grants to manage the socio-economic impacts of the pandemic and support quick recovery, according to a press release of the Manila-based lender on Wednesday.

The ADB is also processing two programme loans of $500 million each and a $940 million loan for the government's Covid-19 vaccination programme.

For 2021-2023, the ADB has programmed $5.9 billion firm and $5.2 billion standby project assistance for Bangladesh, it added.

The World Bank may provide around $6 billion in the current and next fiscal years for vaccine purchase, the health sector, and the economy's recovery.

Other lenders such as Japan and the Asian Infrastructure Investment Bank have also committed to providing foreign aids.

The finance ministry official said though the government raised the allocation of the foreign aid in the ADP in the current fiscal year, the ministries and division performed poorly when it comes to utilisation.

In the original ADP in FY21, the allocation of foreign aid was Tk 70,502 crore. It has been revised down to Tk 63,000 crore.

In Bangladesh, the use of foreign aid has increased in recent years.

Aid disbursement rose more than 28 per cent to $8 billion in 2019-20, the highest in the country's history.

In the upcoming ADP, the government's own contribution may be increased to Tk 137,100 crore from Tk 134,643 crore in FY21.

The local government division may get an allocation of Tk 34,204.04 crore and the road transport and highways division Tk 28,131.67 crore.

The power division may be allocated Tk 25,553.76 crore, the science and technology ministry Tk 20,723.86 crore, and the railways ministry Tk 13,619.64 crore.

The health services division is to get Tk 13,125.19 crore from the ADP.

Experts have recommended an increased allocation for the health sector.

The finance ministry official said the allocation might increase in the upcoming year, but the health services division was unable to utilise the funds properly.

According to a report of the Implementation, Monitoring and Evaluation Division of the planning ministry, the health services division spent only 21 per cent of the allocation from the ADP in the nine months to March.

The health services division received Tk 6,447.78 crore as project aid from the ADP and used Tk 664.94 crore, which is 10.31 per cent of the allocated fund.

The division was given Tk 5,531.56 crore from the state coffer. But it managed to spend Tk 1,850 crore, which is 33.45 per cent of the allocation, one of the lowest among the ministries and divisions.