An upscale amount of foreign aid worth Tk 1.0 trillion is planned to support Bangladesh's development budget in the upcoming fiscal year, which analysts think would bump up the country's external debt burden.
Officials say the government estimation of foreign-aid component of the Annual Development Programme (ADP) for FY 2024-25 is 20-percent higher than that in the outgoing fiscal year, FY2024.
The Economic Relations Division (ERD) has already prepared the Tk 1.0-trillion project aid (PA) budget allocating the funds against different foreign-funded projects under the upcoming ADP, they add.
The proposed fund is 19.76-percent higher than the Tk 835 billion PA allocation in the ongoing Revised ADP (RADP) and 6.38-percent higher than the Tk 940 billion original ADP of the current fiscal.
"We've already prepared the PA-spending target for the next FY2025. And we have sent it to the Planning Commission for finalising the ADP," a senior ERD official said.
The target of foreign-aid spending for the ADP was prepared through consulting all the ministries and their project-executing agencies over a couple of weeks from late February to early March.
Out of the Tk 1.0-trillion proposed PA outlay, some Tk 960 billion is allocated against different projects while Tk 40 billion earmarked for block allocations, the official added.
Analysts see the abrupt raise in PA amid this time of austerity as contradictory to government policy as Bangladesh has already been under pressure in foreign-loan repayment with a $100 billion worth of external-debt buildup.
When the country's foreign-exchange reserves are depleting, inflation high, and export and remittance inflows insufficient, such "ambitious" target of PA spending will make Bangladesh vulnerable further, they say.
Earlier, the ERD enhanced the PA allocations for the current FY2024 by 1.07 per cent compared to that in the previous FY2023.
Taking a cautious approach, the government finalised a Tk 940-billion project aid (foreign aid) part for the ADP in the current fiscal. In the past FY2023, the PA allocation was Tk 930 billion.
However, the PA target in the current FY2024 was trimmed in March last by Tk 105 billion to Tk835 billion following failure in fulfilling month-on-month expenditure targets.
Asked, a senior ERD official last week said, "Since most of the big ministries have shown better performance in PA spending under the current RADP, we have proposed higher funds in the coming ADP."
According to the Implementation Monitoring and Evaluation Division (IMED), government agencies spent 52.77 per cent of their PA allocations during the first three quarters (July-March) of the current fiscal.
The expenditure is 10.42-percentage-point higher than 42.30 percent average ADP fund utilisation of the current fiscal, the IMED data showed.
"We hope the government agencies will do better in the coming year in implementing the ADP," another ERD official said.
He said the Rooppur nuclear power-plant project is going to get the single-highest fund for the coming FY2025 too like in the previous years.
Besides, the under-construction Padma railway link, MRT-1, MRT-5 north, Jamuna rail-bridge, and Matarbari port-development projects are on the priority list with their slices of higher PA allocations in the next ADP.
Centre for Policy Dialogue (CPD) distinguished fellow Prof Mustafizur Rahman says if the government can release more foreign aid from the pipeline for different priority projects, then it will help turn positive the financial account as well as the balance-of-payments positions.
"Bangladesh government should lay emphasis on utilising the foreign aid stuck up in the pipeline for avoiding time and cost overruns of the development projects," the economist suggests.
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