The government has been forced to cut the annual foreign aid target by US$360 million to $3.30 billion this fiscal due to weak project execution on the part of its various agencies, officials said Friday.
"We have already cut the concessional external assistance target to $3.30 billion from its original target of $3.66 billion in the current financial year (FY) 2014-15," Farida Nasreen, Joint Secretary at the Economic Relations Division (ERD) told the FE.
"We have been forced to revise the aid target downward as the government agencies have shown weak performance in project execution. Despite several measures, no improvement in project implementation is being observed, said a senior Ministry of Finance (MoF) official.
When the project executing agencies fail to implement the foreign loan or grant-supported projects, the external assistance disbursement by the donors decrease automatically, he said.
The MoF official said the government's external aid mobilising agency, the ERD, has already cut the project aid by $360 million to $3.30 billion from the original estimation of $3.66 billion in the current national budget as commitment of concessional aid has fallen sharply in the current year.
The disbursement of external assistance by foreign donors including World Bank, Asian Development Bank, Japan, USAID, DFID, showed a static trend in the first five months of the current fiscal, he said.
The foreign aid commitment to Bangladesh had plunged by 60 per cent to US$896.6 million in July-November period last compared to $1.44 billion in the corresponding period last fiscal, ERD data showed.
According to the ERD, the foreign assistance disbursement during the 5-month period was recorded at $902 million, compared to $887.3 million in the corresponding period last FY2014.
The ERD Joint Secretary said they have not revised the targeted budgetary support and the food aid for the current fiscal.
In the revised foreign assistance target, the government expects $150 million as budgetary support and $50 million as food aid support, ERD officials said.
During H1 of the current FY2015, the government agencies spent Tk 224.94 billion or 28 per cent of the Tk 803.15 billion Annual Development Programme (ADP). Of spending, the agencies spent 27 per cent or Tk 75.90 billion from the total foreign aid allocations in the ADP.
Ms Farida Nasreen said they are hopeful that the revised foreign aid target of $3.30 billion would be exceeded in the remaining months of the current FY2015.
Officials said with internal revenue falling short of expectations, the government banks on foreign aid to keep its budget deficit down to a manageable five per cent of the Gross Domestic Product (GDP).
The government received a record US$3.0 billion foreign aid in the last FY2013-14 following a significant rise in disbursement by World Bank and China. In the previous FY2013, the government received nearly $2.78 billion foreign loans and grants from all the development partners.
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