Japan warns of halting aid to Bangladesh

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FHM Humayan Kabir
Japan has threatened to suspend aid to Bangladesh if the government fails to speed up project implementation and ensure "transparency and accountability" of its funding programme, officials said Thursday.
The Japanese International Cooperation Agency (JICA), the global development arm of the world's second largest economy, recently sent a letter, voicing the warning and its concern over some of the projects.
Officials have termed the move unusual, saying Bangladesh's development programme may face a setback if the country's largest bilateral donors halt its financial assistance --- a large chunk of which is soft loan and the rest grants.
"In the letter Japan has called the government to ensure transparency and accountability in its aided projects. Tokyo has also threatened to halt aid to Bangladesh if project implementation does not speed up," an official said.
The Japanese aid agency has also expressed its concern over tardy progress of its funded projects in Bangladesh, he told the FE, speaking on condition of anonymity.
ERD secretary M Musharraf Hossain Bhuiyan admitted receiving the letter.
"Japan expressed concern over some of the issues of ongoing projects. We are examining their unease expressed in the letter. We will then take the next course of action," he told the FE.
Finance ministry officials said they have taken the warning seriously and would now request the finance minister to visit Tokyo shortly to iron out differences and strengthen bilateral relations.
They said the JICA has specifically pointed the finger at its funded programmes in railway, telecom and water sectors, where progress has been unusually slow in the last few years.
In addition, the government's project implementing agencies have even failed to execute some of the key ongoing projects, leading to shrinkage in the Japanese aid disbursement.
JICA and Japanese embassy officials have recently attended a project evaluation meeting of a number of ministries at the ERD and expressed dissatisfaction at the slow execution of their financed projects, the officials said.
Bangladesh received only about US$35 million worth of aid from Asia's largest economy in the 2008-9 fiscal year although its aid commitment was more than $400 million during the period, ERD officials have said.
The ERD official said among all Japanese borrowers, Bangladesh's aid utilisation performance is by far the slowest in the last financial year. The country could spend only six per cent of the Japanese aid in 2008-9.
Utilisation of Japanese aid varies between 17 and 25 per cent in neighbouring India, Sri Lanka and other poor Asian countries.
Another ERD official said the government's laggard spending could jeopardise the next aid package from the JICA. Under its next aid programme, Tokyo has pledged to provide nearly $450 million worth of assistance to Bangladesh.
Japan disbursed at least $250 million worth of assistance to Bangladesh every year until FY2003. In the past five years, the aid flow has trickled down, with the last fiscal year's amount one of the lowest in decades.
Since independence, Bangladesh received US$7.25 billion worth of aid from the Japanese government. Most of the aid is tagged less than one per cent interest rate.