Aid pipeline bulges to $16.32b last fiscal

Posted September 19th, 2012 by |
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The aid pipeline for Bangladesh that represents committed but undisbursed foreign loans has continued to bulge. The unutilised foreign aid swelled to US$16.32 billion until the close of last fiscal year. The government agencies have failed to use the committed external resources because of their inefficiency, officials said Saturday.

Economic Relations Division (ERD) data shows the foreign assistance in the pipeline increased by $3.94 billion in the last fiscal (2011-12), showing a 28.42 per cent rise over that of $13.86 billion of the previous fiscal (2010-11).

“The foreign aid in the pipeline is ballooning every year as the implementation agencies are failing to execute in time the donor-assisted projects in time,” said a top ERD official.

Development analysts said inefficiency of the government and lack of transparency in project implementation are affecting the aid disbursement, inflating the aid pipeline.

The project aid is the major part of the total foreign assistance to Bangladesh. The aid disbursement against commitment by the donors depends on implementation of the projects in time.

ERD statistics showed that the government ministries and agencies could utilise only $2.03 billion worth of foreign aid from the available $4.497 billion in external assistance which was committed by the multilateral and bilateral donors during the just concluded fiscal year.

Among the donor agencies, the World Bank (WB) had the highest amount of undisbursed but committed fund, showed the ERD statistics. Thus, the share of International Development Association (IDA), the soft loan window of the Washington-based global lender from which Bangladesh receives the WB aid, rose to nearly $4.30 billion until the last fiscal.

The Manila-based Asian Development Bank (ADB) had about $3.10 billion aid in the pipeline — the second highest amount of unutilised but committed aid fund for Bangladesh.

The bilateral donor, Japan International Cooperation Agency (JICA) had its share in undisbursed amount of external assistance at $2.4 billion.

“Due to the inefficiencies of the government agencies and alleged corruption in the process of execution of projects, the pace of project implementation is slowed down,” development researcher Zaid Bakht said.

He said the separate procurement guidelines of the donors and the government are one of the major reasons behind delays in project utilization, resulting in stuck-up position of foreign aid in the pipeline.

The ERD that is responsible for seeking, and ling up of, external aid, is highly critical of the project implementers, stating that slow implementation of project results in slow disbursement of aid which leads to cost overturn and impacts adversely the efforts for mobilising fresh external assistance.

Poor aid disbursement has also its unfavourable impact on the country’s balance of payments (BoPs) and leads to increased borrowing by the government from domestic sources, the ERD said in its analysis.

The ERD said: “Projects are often designed without proper planning of feasibility studies. Also people engaged in the project preparation are not properly trained.”

In a recent meeting of the Local Consultative Group (LCG) in Dhaka, the ERD urged the donors to work out ways for forming a uniform procurement guideline for Bangladesh to avoid the complexities in execution of the donor-funded schemes.

A senior Planning Commission official said bottlenecks in procurement, contradictory procurement guidelines of the government and the donors and complex approval procedures by the donors before fund disbursement, are the major reasons for the bulging external aid pipeline.

“If the procurement complexities could be overcome, most of the projects would have been implemented in time and the committed foreign aid could witness a faster pace of disbursement,” the official told the FE.

The ERD officials said lengthy process for preparation of Development Project Proposal (DPP), its approval, slow procurement and implementations at a snail’s pace eat up much time, all of which swell the amount of unutilsied assistance in the pipeline.

There is no alternative to reinforcing the bilateral ties between the government and the donors for ensuring quick disbursement of foreign aid, the officials added.


FHM Humayan Kabir


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