Foreign aid utilisation still unsatisfactory

At the end of the last fiscal year, foreign aid in the pipeline to Bangladesh went up to a record high USD 48.11 billion. Fresh commitments amounted to USD 9.8 billion, and although the government managed to spend USD 6.2 billion out of that—the highest ever—it still fell short of its USD 7.5 billion spending target.

Data from previous years shows that the same thing has been happening over and over again, which cannot be a mere coincidence. Clearly, there are some systemic problems that are hindering our ability to utilise foreign aid according to the government's own established targets, including delays in project approval, appointment of project staffers, contract approvals, etc. Additionally, it seems we do not have the capacity to fully absorb the funds that are coming in from abroad, which on the one hand is causing us to fall short of the spending target every year and, on the other, could eventually frustrate foreign donors as well as lead to unoptimised use of resources. Weak capacity of implementing agencies, coordination issues with the Planning Commission, procurement delays, etc., have been identified as some of the factors that hamper implementation and slow down fund disbursements. Yet, very little progress appears to have been made to rectify these problems.

With our economy growing rapidly, foreign donors have shown greater interest to invest in Bangladesh. Whereas yearly aid commitments used to be around USD 1 billion to USD 2 billion before FY2009-2010, it has risen to more than USD 5 billion since then, giving Bangladesh a much-needed financial boost. In order to make better use of that, the government needs to increase our aid absorption capacity and do so at a much faster rate than what we have seen in recent years.