Special Correspondent :
Foreign aid committed to Bangladesh by countries and development partners for implementing development projects has hit record high due to slow pace of implementation of projects, caused by flawed design, lengthy approval process and complexity in land acquisition.
The size of the foreign aid in pipeline crossed $60 billion this fiscal year, according to the Economic Relations Division (ERD).
The amount stood at $51.6 billion at the end of fiscal 2020-21 and $9.0 billion more added to it in the current fiscal year (2021-22), ERD officials said.
Until the 2019-20 fiscal year, the size of the foreign aid in pipeline was $49 billion and $2.24 billion more was added to it in the 2020-21 fiscal year. Unused foreign aid reached $44.51 billion in fiscal year 2018-19 while it stood at $35.75 billion in fiscal year 2017-18, according to ERD.
“Currently, more than $60 billion in foreign aid remains stuck in the pipeline despite a record disbursement of development assistance in the last few years. Even if we spend $10 billion every year, it will take six years to utilise the piled up fund. But, our ability to use foreign loans and grants is low. As a result, the amount of committed foreign fund in the pipeline is bulging every year,” a senior ERD official told The New Nation yesterday on condition of anonymity.
EDR officials said, the government of Bangladesh signs deals with its development partners every year to finance different development projects. Once a contract is signed, it is considered a commitment.
For the last seven years, Bangladesh has signed loan or grant contracts worth $10 billion on average each year. However, it only managed to release about $5-7 billion a year, an ERD official said.
ERD data showed that the government got a commitment of foreign aid worth $9.35 billion in fiscal 2020-21, but could managed to release $7.1 billion. This added a new amount of $2.25 billion to the pipeline in the last fiscal year.
Similarly, a $9.55 billion financing deal was signed in fiscal 2019-20 and $7.27 billion was released from the amount. This added $2.28 billion to the pipeline that year.
“The present government took many mega development projects after it came into power, which increased the amount of foreign aid commitment.
But as they could not keep pace in releasing the fund, the pipeline continue to grow,” said a former ERD official asking not to named.
He said the government agencies and divisions should speed up implementation of the projects financed by foreign donors in order to ensure the faster release of foreign funds.
“However, the government agencies have already taken initiative to faster implementation of the projects along with proper monitoring and it helped further release of foreign funds. On average $7 billion was released in the last two years,” he added.
He further noted that the Covid-19 pandemic has affected the implementation of development projects. As the pandemic continues to recede, it will help speed up project implementation.
The ERD data also showed that the development released $4.69 billion worth of financial assistance during the July-January period of the current fiscal year, higher than $3.35 billion in the corresponding period last year.
When asked, economist Dr Zahid Hossain said, “It is natural that pledged foreign fund will increase if project implementation does not speed up.”
“In Bangladesh it is seen that the implementation of a five-year development project often takes eight years. By this time new funding commitments are coming from donors. Even if there is fund, it is not utilised. As a result, foreign aid in the pipeline ccontinues to swell,” he noted.
“So, the authorities must speed up the implementation of foreign financed projects if they want to reduce the size of the pipeline,” said Dr Zahid, former lead economist at the World Bank’s Dhaka office.
He observed that there is a huge gap between aid commitments and disbursement in Bangladesh. In this context, the authorities need to overhaul project procurement and project management for quick aid disbursement from the pipeline. “Besides, the government should sincerely work to remove obstacleson the way of implementing projects,” he added.
