Foreign aid spending not up to speed

In spite of an ambitious target, foreign aid disbursement increased only 4.75 percent in the first four months of fiscal 2015-16 from the same period a year earlier.

The government has set a disbursement target of $4.36 billion for the fiscal year, up 30 percent year-on-year.

Between July and October, only 16.77 percent of the amount, or $731.45 million, was disbursed.

The low disbursement has been blamed on the slow pace of implementation of the Annual Development Programme, said an official of the Economic Relations Division. In the July-October period, only 11 percent of the total ADP allocation was used, which is the lowest in three years.

In the recent meeting of the Bangladesh Development Forum, Finance Minister AMA Muhith cited the spending of foreign aid as a major challenge.

The reasons being: an increase in stand-alone projects and subsequently heavy aid fragmentation, less vibrant coordination in sector-level working groups, capacity deficits and implementation lag. 

The ERD official said the government and the development partners will take a joint action plan which will help speed up the utilisation of foreign aid. Of the $731.45 million that was disbursed, three multilateral lenders -- the World Bank, the Asian Development Bank and the Islamic Development Bank -- accounted for $469 million. The World Bank dispatched $312 million out of its target of $1 billion for the entire fiscal year.

The Asian Development Bank disbursed $108 million, and the government has a target of getting $960 million from the Manila-based multilateral lender this year. As of October 31, the total amount of foreign aid in the pipeline is $21.24 billion.