Marked decline in foreign aid flow

The foreign aid inflow during July-March this fiscal 2010-11 recorded a marked fall as the government received only US$1.28 billion assistance, half a billion dollar lower than that of the corresponding period of the last fiscal, officials said Thursday. Economic Relations Division (ERD) officials said the government has received only $1.28 billion in external loans and grants in the first three quarters of the fiscal 2010-11 from donors compared to $1.79 billion in the same period of the last fiscal. "Weak performance of the project implementation agencies, which did earlier sign external aid deals with donors, is one of the major reasons behind the drastic fall in aid disbursements," a senior ERD official told the FE. Though the agencies signed aid deals worth $2.4 billion for different projects in July-March period with the donors including World Bank, Asian Development Bank, Japan and the UK's DFID, only $1.28 billion assistance have been disbursed, he said. The ERD official said lack of budgetary support from a large donor like the World Bank and a very small amount of assistance from the largest bilateral donor, Japan, have affected the aid flow this year reversing the increasing trend of aid disbursement during the last few years. "The aid flow during same period last year boosted as the Asian Development Bank (ADB) alone disbursed $500 million as budgetary support to weather the effects of the global economic meltdown," he said. The official said, "we were expecting $300 million funds as budgetary support from the World Bank this fiscal but this has now become uncertain." Following the poor project implementation performance, the government has already downsized the total foreign aid disbursement target to $2.34 billion against the earlier projection at $2.77 billion for implementing the national budget of the current fiscal. The government agencies, responsible for implementing foreign-funded projects under the Tk 351.30 billion annual development programme (ADP) for the current fiscal, could spend during July-March period of fiscal 2010-11. A half of the ADP funds, both local and external, was, however, spent during the period under report. "The current situation about aid inflow has made it difficult to reach the projected target of $2.34 billion for the current fiscal. If the target is not achieved, not only the financing of the budget deficit financing will be difficult but also many development works will largely suffer," said the ERD official. ERD statistics showed the government received $863 million loans and $423 million as grants from donors during July-March period of the current fiscal for developing the country's impoverished infrastructure and comparing its socio-economic condition.