Lower fund demand prompts govt to go for cut in foreign aid allocation

The government is likely to slash foreign aid allocation in the revised development budget as most of the ministries and agencies sought lower funds, officials said on Saturday.

The lower fund demands came at a meeting at the Economic Relations Division (ERD) last week.

The meeting is supposed to revise the Tk 600 billion foreign aid allocations for the current Annual Development Programme (ADP), they said.

The ERD consulted with different public agencies including the Power Division, Road Transport and Bridges Ministry, Railway Ministry, Education Ministry, Local Government Division and Water Resources Ministry from January 09 to 10 on their possible demands for project aid in the upcoming revised ADP.

Among the agencies, some larger budget holders such as the Power Division, Roads and Highways Department (RHD), Local Government and Engineering Department (LGED), and the Bridges Division have sought lower aid than their current allocation in the original ADP, officials said.

"We are working on the fresh demand for project aid," a senior ERD official said.

"Once we finalise the exact necessary amount of the aid in the upcoming revised ADP, we will then send it to the Planning Commission (PC) for finalising the RADP," the official added.

Meanwhile, the Commission has started work on revising the current Tk 1.73 trillion ADP in view of unsatisfactory execution rate of the development budget in the first half of the current fiscal year (FY) of 2018-19.

Ministries at the meeting with the ERD last week said that the complex procurement system and approval procedure from the development partners are the key reasons for the delay in foreign aid utilization, which resulted in lower fund demands at the end of the year, the ERD official told the FE.

Different bilateral and multilateral development partners offer Bangladesh foreign aid-loans and grants-for implementing different development projects every year.

The government allocates those money for many development projects in addition to its own fund from the internal resources for bearing the overall costs.

Another ERD official said, "The project aid has already been confirmed by the development partners for the disbursement against different development projects under the current ADP."

But the poor utilisation capacity of the public agencies would leave the foreign aid in the pipeline to swell.

The unutilised concessional foreign assistance has already crossed US$ 29 billion mark, according to ERD data.

According to the official data, the government ministries and agencies spent only 21 per cent of the Tk 600 billion project aid outlay in the first five months (July-November) of the current ADP.

The rate of spending was higher at 22 per cent in the same period of the last fiscal year.

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