Foreign aid bankrolling dev budget faces cuts

Foreign funds allocated for bankrolling Bangladesh's development budget may be slashed as the interim government considers the trimming for public agencies failure to implement the aided projects in time, officials said.
The post-uprising reformist government will also estimate the necessary project-aid requirements in the national budgets for the next two consecutive fiscal years (FY) 2025-26 and FY2027, they said Monday.
Meanwhile, the Economic Relations Division (ERD) under the Ministry of Finance (MoF) has got down to doing preliminary work on revision of the Annual Development Programme (ADP) for the current FY2025 and will sit with all ministries and agencies from early next month.
The ERD will revise the project-aid part of the current Tk2.78 trillion ADP, they said.
"We have sought information from government ministries and agencies about the current ADP allocations and requirements in the remaining part of the current fiscal," says a senior ERD official.
Based on the PA-spending trend in the first quarter (July-Sep) of the current fiscal, the ministries had been asked to estimate their fund requirements in the RADP in the remaining three quarters (Oct-June), he adds.
"Besides, we have also sought their budgetary fund requirements in the next two fiscal years -FY2026 and FY2027-for getting an idea of the fund demands in the national budget for development works."
After getting all the information this week, the ERD will sit for consultation with the ministries and divisions from early next month, he added.
In the current fiscal year, the government framed a Tk2.78-trillion ADP wherein Tk1.00 trillion has been allocated from project aid coming from international development financiers.
The public agencies during the Q1 of the current FY implemented only 5.36 per cent of the Tk 1.00 trillion worth of aid in the ADP.
The ADP allocation from government exchequer is Tk 1.65 trillion and from own funds of the autonomous and semi-autonomous bodies is Tk 132.89 billion.
The government every fiscal year revises the ADP in the second half mostly for failure of the project implementation by the ministries and agencies.
In the last FY2024, the ERD cut the PA part of the outlay by Tk105 billion in the revised ADP in the second half of the fiscal from an original allocation of Tk 940 billion in the Tk 2.74 trillion ADP.
Meanwhile, the interim government's cautious spending approach is also going to force the ministries and agencies to get tightfisted and cut their PA allocation in the proposed RADP for the current fiscal, says another ERD official.
He foretells that the PA may be cut in the upcoming RADP, too, as some of the ministries are informing them that they don't need the total funds allocated in the original ADP.
Project aid means funds allocation against different projects by taking loans and grants from bilateral and multilateral development partners of Bangladesh.
In the last FY2024, the global bilateral and multilateral lenders provided Bangladesh $9.86 billion worth of loans and $9.21 billion in FY2023.
When asked, the ERD official said they were hopeful of completing the revised ADP within next two months.
Meanwhile, the Planning Commission (PC) has yet to start revision of the current ADP.
A senior PC official says they would ask the ministries and divisions shortly for sending the revised project-allocation requirements aimed at revising the current development budget.
The RADP for the current FY2025 will be finalised by February next, the PC official adds.

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