No improvement in aid utilization

Successive governments have been adept at courting foreign aid for development projects. Yet they have consistently failed to increase the rate of implementation of the same. The size of unutilised funds has now reached a figure that is no longer possible to ignore. According to a report published in this newspaper, a whopping $46.5 billion in foreign aid remains stuck in the pipeline thanks to failure in project execution by different public agencies.

That public agencies have not been able to implement projects speaks volumes for the manner in which they were undertaken in the first place. While much has been written about the lack of accountability of Bangladeshi public agencies, the same is not true for foreign donor agencies -- they do have to answer for unutilised funds earmarked for various development projects in foreign countries. Hence, it hardly comes as a surprise when Bangladeshi institutions fail to implement, there are consequences leading to suspension or blocking of disbursement of funds / loans by foreign counterparts.

Development partners, both bilateral and multilateral, usually disburse funds based on work progress. So, when work stalls at any stage, no further fund is made available. This is standard operation procedure globally. The difficulty for Bangladesh of course is that more often than not, the billions of dollars that have been secured are mostly for large, expensive, infrastructure projects and any hold-up there ultimately becomes a problem for the country's pace of development.

The problem for Bangladesh presently is that its foreign exchange reserves are hovering around the US$20 billion mark. Efficient and timely implementation of development projects would have helped expeditious release of aid money, thus, beefing up reserves to some extent. Something has to change in the way the country courts foreign funding and improve the capacity of implementing agencies to get out of this financial quagmire. One allegation that has been consistently levelled against policymakers is that not enough feasibility study is done prior to taking up some new projects -- small or big. This is unheard of in any country these days. How exactly are policymakers to judge the efficacy of a particular project without doing a feasibility study? How will the government calculate the cost-benefit of development projects unless it has such a study in hand? But that is precisely one of the problems facing the government.

Secondly, what about the capacity to implement? Are the agencies responsible for getting these projects off the ground competent for the job? Who decides the level of competence and who is liable for work not done during implementation? The Implementation Monitoring and Evaluation Division (IMED) under the Ministry of Planning is tasked to oversee project execution, but it is handicapped by shortage of manpower and logistics. The lack of motivation to do their job properly by project directors also remains a major problem. Also, since there is little in the way of oversight and accountability, years are wasted due to non-implementation of projects. Ultimately, at the end of the day, it is the credibility of the government that is at stake. Local stakeholders hardly take any blame. But foreign agencies which make the fund available are not amused at such developments. They may turn their back to the country for recurring failure to utilise aid.

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