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Foreign aid to see record cut

Officials hold slow project implementations responsible
Mohammad Zakaria
24 Feb 2023 00:00:00 | Update: 23 Feb 2023 23:59:12
Foreign aid to see record cut

The government is likely to trim around Tk 18,000 crore from foreign assistance in the Revised Annual Development Programme (RADP) of FY2022-23 due to the slow implementation of foreign funded projects.

In this regard, the Economic Relations Division (ERD) has sent a proposal to the Planning Commission about sector-wise allocation for these projects, commission officials said.

Officials said that this would be the highest amount of foreign aid cut from the RADP in FY23.

The government has approved an ADP of Tk 2.46 lakh crore for FY23 and Tk 92,020 crore of it is supposed to come from foreign assistance. But in the RADP, the foreign aid amount is likely to come down to Tk 74,020 crore, said commission officials.

Officials also said the government will not reduce the allocation from local sources because it plans to use them in projects of key ministries.

About the matter, State Minister for Planning Shamsul Alam said the foreign aid has been trimmed in the RADP due to slow implementation of the foreign funded projects.

He said that lack of skilled project officials, the complexity of tender process and appointment of consultant are also behind the slow implementation of such projects.

“We have asked the ministries concerned several times to speed up the implementation of the foreign aided projects. But nothing significant happened,” he added.

The amount will be finalised at a National Economic Council meeting likely to be held at the end of February after the draft proposal is finalised by Planning Minister MA Mannan, a senior commission official told The Business Post.

On January 10, ERD held meetings with different ministries and divisions asking to increase the use of foreign funds in implementing projects.

The original ADP allocation was Tk 2,25,324 crore for FY2021-22. It was later brought down to Tk 2,07,550 crore after the commission cut Tk 17,774 crore — or 7.87 per cent of the original total — in the RADP.

In FY2020-21, Tk 17,976 crore was also cut in the RADP and Tk 9,800 crore in FY2019-20.

Zahid Hussain, former lead economist of the World Bank’s Dhaka Office, told The Business Post that the foreign assistance amount gets reduced from ADP every year due to a lack of proper planning and implementation of the development projects.

“There are two reasons behind this. Firstly, the authorities plan projects without proper cost estimation. They also prepare project proposals without considering cost escalation,” he said.

“Secondly, the foreign-funded projects are not being implemented properly because the money remains stuck in the pipeline,” he added.

Earlier, ERD held meetings with 118 different ministries, departments, divisions, agencies and institutions between December 14 and 19 last year, seeking their demand for foreign funds to revise the ADP.

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