AN English daily reported on Monday that some $1.94 billion in foreign aid remains unutilized due to our lack of of ability to use the fund. Whereas the investment scenario in the country is simply at a standstill and our ability to negotiate new deals is remarkably poor. Thus, it speaks much about our capacity building in adopting a real pro-growth policy regime, particularly in implementing projects within a scheduled time frame. The Economic Relations Division (ERD) has revealed recently that the aid pipeline bulged due to huge mobilisation of foreign aid starting from fiscal 2010-11. The government’s failure to disburse the aid money to several projects proved the ineptness of the government which suffers from legitimacy problems. Experts opined that Bangladesh could steer up economic growth by properly utilising the aid that come from the development partners if a proper policy matrix is pursued.
The report said that the average commitment between fiscal 2010-11 and 2013-14 stood at $5.6 billion in contrast to $2.6 billion between fiscal 2006-07 and 2009-10. In response, the average disbursement between fiscal 2010-11 and 2013-14 was raised to $2.43 billion from $1.94 billion in the preceding four fiscal years. And now the government has decided to intensify its foreign aid disbursement efforts this fiscal in the face of a sudden surge in aid inflow to a record $19.5 billion. The government aims to dispatch 22 percent of the total by next June, after which the disbursement rate will be bumped up to 25 percent. This hasty rush for fund release may open doors to corruption, opine experts.
Admitting the piled up foreign aid, the Cabinet Secretary said the government would take steps to improve the disbursement rate, including heightened monitoring at the field level. He, however, assured that the donors would be kept posted of the process . The ERD report, however, said that the swell is likely to recede soon as the capacity for project implementation is continuously increasing. One of the core reasons cited for slack aid disbursement is the delay in project take-off: it takes one to two years for projects to roll. Some 62 percent of the delays were caused due to bottlenecks on the government’s side and 19 percent due to the development partners; 12 percent were due to both government and development partners, and 7 percent were affected by outside causes like political unrest, the ERD report mentioned.
The delays from the government side were caused by way of slow approval of project proposals and drawn-out tendering, contract awarding, project designing and land acquisition processes. From the donors’ side, lags in project approval and appointment of experts or consultants held back the start dates. All these problems ultimately snowball into delayed disbursement of aid in the pipeline.
In our view, to accelerate the foreign aid utilization what is urgently needed is the capacity building of the government machinery. Above all else, the donors should also strengthen their anti-corruption mechanism otherwise the money, most likely, would be misappropriated.
