Govt likely to cut foreign aid allotment in RADP

FT ONLINE

The government is likely to slash foreign aid allocation in the upcoming revised development budget, as many ministries and divisions have sought lower funds, officials said on Wednesday.

The Economic Relations Division (ERD) is now consulting with the government agencies to determine their actual fund demand for the remaining period of the current fiscal year (FY), 2019-20.

The ERD started a three-day discussion with several public bodies on Tuesday for revising the current Annual Development Programme (ADP), which will end today (Thursday).

"We've been consulting with all the ministries and divisions concerned since Tuesday. We are trying to perceive the implementation status of the ongoing foreign-funded projects along with fund requirements of the agencies for the remaining period of this fiscal," an official of the ERD said on Wednesday.

"We have already completed consultations with some large ministries and divisions, including road transport and bridges, health, energy, agriculture, education, and power on Tuesday and Wednesday."

"On Thursday, we will consult with agencies like local government, water resources, and science and ICT," the official said.

Some project authorities under the ministries and divisions want to sacrifice their allocated funds in the current ADP, he noted.

The government in FY 20 has allocated Tk 718 billion funds as project aid (foreign aid) in the original Tk 2.027-trillion ADP.

Since some ministries are seeking lesser funds than their allocations, the overall size of project aid in the revised ADP (RADP) could be slashed, the ERD official added.

Officials, who attended the meetings, said the ministries in the consultations opined that complex procurement system and approval procedure by the development partners are the key reasons for the delay in foreign aid utilization, resulting in lower fund demand.

"We will now work on their fresh demand, and fix revised project aid allocations for the upcoming RADP," said the ERD official.

"After completion, we will send the revised project aid proposals to the Planning Commission (PC) for finalizing the RADP for FY 20," he added.

However, the ERD Secretary Monowar Ahmed said the ministries and divisions should not sacrifice their allocated funds in the middle of the year. Rather, they should try to utilize the funds by streamlining their project implementation efforts.

The development partners and agencies have already confirmed their assistance against various projects, which are now in the pipeline. So, these should be utilized in time, he added.

Different bilateral and multilateral development partners offer Bangladesh foreign aid in the form of loans and grants for implementing different development projects every year.

The government allocates the foreign assistance for many development projects in addition to its own funds, collected from internal sources, for bearing the overall cost.

Another official said: "The development partners have already confirmed their project aid for disbursement against different projects under the current ADP."

But poor utilization capacity of the public agencies swells the amount of foreign aid in the pipeline. The unutilized concessional foreign assistance amount has already crossed US$ 30-billion mark, the ERD data showed.

According to the official data, the ministries and agencies have spent Tk 76.37 billion, 10.64 percent of the Tk 718-billion project aid outlay, in the first four months (July-October) of the current ADP.

The rate of project aid spending was 14 percent higher than the same period in FY 19.