The government and development partners will set up a joint team to assess progress in foreign-aided projects and find ways to spend $14 billion in unused donor funds.
The team will identify bottlenecks in the projects and make an action plan to quicken the spending of foreign aid that has piled up over the years.
The decisions came at a meeting between the government and development partners at the Economic Relations Division office in the capital yesterday.
Local representatives of development partners stressed the need for efficient and transparent use of their taxpayers' money.
"The donors have already committed it to Bangladesh. It is already yours. All you have to do is to spend it. That is why this is so critical," World Bank Country Director Ellen Goldstein told reporters after a plenary meeting of Local Consultative Group.
"Those donors are even more concerned that every dollar and every pound they allocate for aid to Bangladesh is spent for the intended purpose."
She earlier told the meeting that in some cases, after signing an agreement with the government, development partners have to wait for one to two years for activities to begin and money to flow.
“This is a tragedy for the people of Bangladesh,” she said.
Iqbal Mahmood, senior secretary at the ERD, co-chaired the meeting on behalf of the government and Goldstein for development partners.
Mahmood said the relationship between the government and development partners is good.
"Both the aid flow and the disbursement are good."
The government disbursed $1.7 billion in the last fiscal year, and it would cross $2 billion in the current fiscal year, he said.
Arastoo Khan, additional secretary at the ERD, made a presentation on the country's aid flow, commitment and disbursement at the meeting. He also pointed out problems in implementing donors-funded projects.
He said annual disbursement normally stands at around 23 percent of the amount that remains in the pipeline. But the disbursements are declining.
In 2010-11, the disbursement of foreign aid was 17.87 percent, which might reach 8 percent in the current fiscal year, he told the meeting.
Khan also outlined reasons for slow disbursement of donors' money.
On the government side, procurement-related problems account for 21 percent delay, faulty project documents for 25 percent delay, and unrealistic aid estimates for 15 percent delay.
On the development partners' side, 50 percent delay is caused by hold-up in awarding contracts. And the appointment of consultants causes 21 percent delay.
The ERD has found out these reasons for delay by analysing 58 problematic projects in the last two fiscal years.
The ERD, the Planning Commission and development partners will form a joint team to conduct on-the-spot inspection.
The government and development partners decided to hold meetings quarterly to monitor the implementation of the agreed measures closely.
Outstanding commitments of external aid now top $13 billion, while aid continues to fund 35-40 percent of the country's Annual Development Programme (ADP).
Mahmood said, "Development partners are supporting us with record financial commitments. The increased external aid commitment must be matched by scaled up disbursement by way of enhanced implementation of the ADP to get better results.”
“Today we agreed with partners to work together to conduct regular tripartite portfolio reviews, strengthen monitoring of lagging projects and develop an electronic aid management platform,” he said.
Goldstein said, “The good news is that aid disbursements for projects are running at the same level as last year. Nonetheless, a quantum improvement in implementation is possible if structural obstacles are alleviated.”
“Going forward, development partners hope to see concrete measures to streamline project approval and revisions, increase transparency and efficiency of public procurement, enhance continuity in project staffing and deepen public financial management reforms to encourage greater use of country systems,” she said.
Secretaries from different ministries, ambassadors and heads of development agencies in Bangladesh attended the meeting.