Unused foreign aid set to stand at $12b
Unused foreign aid in pipeline may cross $12 billion mark at the beginning of the next fiscal year mainly due to failure of ministries to implement foreign-funded projects.
The amount was $9.4b on July 1 last year, according to Economic Relations Division (ERD) statistics.
To make up the budget deficit, the government accepts low cost foreign funds. Of this, a sizeable amount is left unutilised every year, a high official of the finance ministry told The Daily Star.
The unused amount goes back to the pipeline as it is not consumed as per schedules of different projects, he added.
Though the foreign aid has increased much, the government is not being able to utilise it properly, admitted Finance Minister AMA Muhith during a pre-budget view exchange meeting with the members of Economic Reporters' Forum last month.
Several ministries in the current fiscal year have already surrendered allocations of foreign funds worth 12 to 100 percent in 37 projects, mentioned an ERD official.
Besides, the government has slashed the current Annual Development Programme (ADP) by more than Tk 3,000 crore. The entire amount is from foreign aid, he added.
He pointed out the delay in starting the construction work of Padma Bridge as one of the major causes for low disbursement of project aid.
Sources in ERD said different development partners commit $2b to 3b to Bangladesh every year.
But the amount may hit a record high of $6.5b in the current FY. The government has already entered agreements with its partners for $4.7b.
They attributed the increase to the donors' commitment for the implementation of the Padma Multipurpose Bridge Project.
The donors will provide $2.70b for the project, of which agreements have already been signed for $1.74b.
However, the disbursement of aid remained very worrying. The government targeted to receive a total aid of $2. 7b in the current FY and later revised it to $1.9b.
The finance ministry is doubtful about achieving the revised target. Only $1.29b has been disbursed during the first nine months of the current FY, which was $1.77b in the same period of the last FY, noted a ministry official.
The World Bank imposed new conditions for pre-qualification of bidders for Padma Bridge project, which caused the delay, claimed a communications ministry official.
The implementation of several foreign-aided projects in the power sector was also delayed due to conditions imposed by donors, he added.
As the government could not fulfil the conditions for $600m budget support commitment made by the WB and the International Monetary Fund for the current FY, the amount was not disbursed.
An ERD high official, however, hoped the foreign aid disbursement would cross $3b in the next FY as several big projects, including the Padma Bridge, will commence. The WB and IMF are expected to disburse funds for budget support in the next FY.
Comments