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The government is preparing to reduce foreign project aid in the current fiscal year's Annual Development Programme (ADP) as ministries and divisions continue to lag behind in project execution.
Officials said consultations will begin next week to reassess how much of the Tk 860 billion project aid allocation can realistically be spent in FY2025-26.
The move comes in response to sluggish implementation during the first quarter (July-September), with most agencies struggling to utilise funds on schedule, senior officials at the Economic Relations Division (ERD) said.
The government, they added, wants to align the development budget more closely with actual spending capacity and adopt a more cautious fiscal approach amid global and domestic constraints.
The ERD has called all ministries and divisions to meetings scheduled between November 2 and 5 at its office in Dhaka to review their first-quarter performance and projected expenditure for the remaining three quarters.
On the first day, 10 ministries and divisions, including the Power Division, and the Ministries of Food, Agriculture, and Environment, Forest and Climate Change, are expected to take part in the discussions.
"We will assess each ministry's progress and capacity to utilise the allocated project aid," said a senior ERD official. "Since spending has been slow so far, it is unlikely that the full Tk 860 billion allocation will be disbursed this fiscal year."
In addition to reviewing the current fiscal year's allocations, the ERD will also estimate project aid requirements for the next two fiscal years, FY2027 and FY2028, to provide an updated projection for the national development budget.
Out of the current Tk 2.38 trillion ADP, Tk 860 billion was allocated as project aid from foreign development partners, Tk 1.44 trillion from government resources, and Tk 86.96 billion from the agencies' own funds.
Every year, the government revises the ADP in the second half of the fiscal year, often cutting allocations due to underperformance by implementing agencies.
In FY2025, for instance, project aid was reduced by Tk 190 billion, from an initial Tk 1.0 trillion, to Tk 810 billion in the revised ADP.
An ERD official said the cautious spending stance of the interim government would further tighten this year's revised budget.
"Some ministries have already informed us that they will not require their full allocations, so we expect another downward adjustment in the RADP," he added.
Project aid refers to loans and grants provided by bilateral and multilateral development partners to finance various public sector projects.
Bangladesh received $8.57 billion in foreign aid in FY2025, compared to $9.86 billion in FY2024 and $9.21 billion in FY2023.
Meanwhile, the Planning Commission (PC) has also started working on revising the current ADP. A senior PC official said ministries and divisions will soon be asked to submit revised project allocations.
The revised ADP for FY2026, he added, is expected to be finalised by December this year.