Concessional foreign aid in the pipeline swelled to US$18.79 billion and remained unused until February last. The government agencies have allegedly failed to use the same for a number of factors including inefficiencies of local officials and slow disbursement of aid on the part of donors.
Officials said Friday the confirmed but unused external funds in the pipeline could finance two of Bangladesh's development budgets for its social and infrastructure development.
Development analysts are of the view that inefficiencies of the officials of implementing agencies and inadequate transparency in project implementation have been affecting the aid disbursement, leading to the bulging of aid pipeline.
They suggested that the government form a special taskforce to make the pipeline funds usable in the development works of the country.
Incorporating specific guidelines into the upcoming national budget for utilization of the stuck-up funds is another way they recommend.
In the current financial year (FY) 2014-15, the government has allocated Tk 750 billion (US$9.49 billion) funds for the Annual Development Programme (ADP), which comes to nearly half the amount of $18.79 billion in foreign assistance lying idle in the pipeline.
Economic Relations Division (ERD) data showed the stuck-up foreign assistance in the pipeline fattened by $620 million in July-February period of FY2015 from $18.17 billion till last FY2014.
"The foreign aid in the pipeline is ballooning every year as the project- implementing agencies fail to implement the donor-supported schemes in time," said a top ERD official.
Project aid is a major part of the total foreign assistance in Bangladesh. Aid disbursement from the commitments by the donors usually depends on implementation of the development projects in time.
Besides, the external resources are used to finance the income deficit in the national budget.
The ERD statistics show the government ministries and agencies have utilised only $1.84 billion worth of the concessional loans and grants, disbursed by the development partners in Bangladesh during the July-February period this fiscal as against $2.47 billion confirmed during the period.
In the last FY2014, the government agencies utilised $3.08 billion worth of foreign aid out of the available $5.84 billion worth of medium-and long-term loans (MLTL) and grants, confirmed earlier by the multilateral and bilateral donors.
The government spent $2.81 billion worth of MLTL and grants against the
donor-committed $5.85 billion in the previous FY2013 and $2.03 billion from the available $4.497 billion committed in FY2012.
Development analysts Dr Ahsan H Mansur said leaving such a huge amount of confirmed soft loans unused is "really a bad news" for the economy.
"If the government can use the external funds, public investment can go up and it can push our gross domestic product (GDP) growth," he told the FE.
He suggests that the government take a special initiative to utilise the money for the development works.
Development researcher Dr Zaid Bakht says this is unfortunate for the economy that such a huge amount of foreign soft loans and aid are stuck in the pipeline for failure in its utilisation.
"Those funds not only boost public investments, it can facilitate the private investment too. If the government utilises those properly, country's infrastructure will improve and the private-sector investors will come forward with their investment."
Bakht, senior researcher at the Bangladesh Institute of Development Studies, said the government should form a high-powered taskforce to troubleshoot the problem.
He said the separate procurement guidelines of the donors and the government are one of the major reasons behind delays in project utilisation, resulting in the stockpiling of the foreign aid in the pipeline.
A senior ERD official said the finance minister should spell out special guidelines in the upcoming national budget to facilitate utilisation of the unutilised foreign loans.
The government's foreign-aid mobiliser, ERD, has heavily criticised the project implementers, saying that slow implementation of projects results in slow disbursement of aid and that leads to time-and cost-overturns.
It impacts negatively on the balance-of-payments (BoP) situation, leading to increased borrowing from domestic sources, the ERD in its analysis said.
The ERD said: "Projects are often designed without proper planning of feasibility studies. Also people engaged in the project preparation are not properly trained."
A senior Planning Commission official said bottlenecks in procurement, contradiction of procurement guidelines of the government and donors and complex approval procedure by the donors before fund disbursement are the major reasons for ballooning foreign assistance in the pipeline.
The ERD officials said lengthy development project proposal (DPP) preparation, its approval, slow procurement and implementation at a snail's pace eat up much time, causing unutilised assistance in the pipeline to continue snowballing.
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