21 days ago

Timely execution of foreign-aided development projects

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It is a paradox that when foreign aid worth billions of dollars is remaining unutilised, the government, due to forex reserve crunch, has been constrained to cut expenditures on economic activities that require foreign currency. A recently-published report by this paper citing data from the Economic Relations Division (ERD) says that last fiscal year (FY22), committed foreign aid worth over US$50 billion has accumulated in the pipeline waiting to be spent in development projects. But thanks to the lack of, or tardiness in, project implementation, such an enormous sum of foreign fund could not be utilised. This is unfortunate. But who is at fault for such delays in project implementation?  Obviously, it is the project implementing agencies and persons operating those are to blame. So, to get around this implemental hold-up, the first thing that the government should do is to hold those in charge of the projects accountable. In this context, one is dismayed to see that every fiscal year, following implementation failures, the government, in its revised budgets, has been reducing funds for the foreign-aided projects under the Annual Development Programmes (ADPs). Surprisingly, no heads have been seen rolling for the sloth or lack of performance in executing development projects.

Some experts are of the view that unless the government punishes the heads of the slow, or non-performing projects and rewards the successful ones, the situation of underutilisation of foreign aid will never improve. The lack of timely project implementation, as noted in a recently-published ERD report,  can be traced to faults in project design having to do with inadequate feasibility study prior to taking a project leading to planning mismatch. Shortage of trained personnel to run the projects is another important reason for the poor performance in project implementation. These lacunae in the development projects lie behind the inordinate delays in project implementation and result in budgetary or cost overruns. Worse, it slows down disbursement of project aid. So, urgent steps are necessary to be taken to address the issues coming in the way of expeditious implementation of development projects.

One would like to recall at this point that the global lender, the World Bank (WB), during a recent meeting with the government on reviewing the status of some poorly progressing development projects it supports financially, even warned of withdrawing the unspent project money if the authorities in question failed to execute those projects in time. Such a stern reminder from the WB on slow project implementation should be taken with due seriousness. For the ever-bulging aid-pipeline for Bangladesh, as the aid money could not be duly released due to various implementation bottlenecks facing development projects, is apt to send a wrong message to the country's international development partners. In such a crunch time, especially, across the developing world, the demand for foreign aid, which is a critical resource for economic growth, is obviously on the rise. Under substantial pressure from foreign exchange reserve crisis, Bangladesh could well benefit from the unspent foreign aid, if only the development projects could be executed in time. But that is not to be. 

In that case, the donors might even think of diverting the aid money to areas where it is urgently needed. Under any circumstances, a foreign-exchange-starved country like Bangladesh can hardly afford that to happen. It is more so at a time when the economy is well on its path to graduate from a least developed to a developing one.

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