Govt likely to cut foreign aid chunk in revised ADP

FHM Humayan Kabir The government is likely to cut foreign aid allocations by 20 per cent to Tk 150 billion in the development budget as project implementation agencies have shown poor performance in implementing the donor-supported schemes, officials said Thursday. Finance Ministry officials said they have finalised the cut in project aid downsizing its original outlay of Tk 186.85 billion for the donor-supported projects under the current Tk 460 billion annual development programme (ADP). The Economic Relations Division (ERD) has finalised the allocations for the ministries and divisions after a thorough review meeting last week in an attempt to formulate the revised ADP for the current fiscal 2011-12. Out of the total Tk 460 billion outlay in the ADP, Tk 273.15 billion has been allocated from the government's own resources and the rest Tk 186.85 billion from the external resources as project aid to implement 1039 developemnt projects. "We will now send the downsized project aid outlay to the Planning Commission for finalising the revised ADP," a senior ERD official told the FE. Since the government's project implementing agencies have been failing to spend the available foreign assistance against different development projects, there is no way but to cut the outlay in the development budget, he added. The project implementing agencies have spent only Tk 23.95 billion, coming to 13 per cent, from Tk 186.85 billion project aid outlay in the ADP during the July-November period of the current fiscal 2011-12. On the other hand, the agencies have spent Tk 69.19 billion, 25 per cent of the total Tk 273.15 billion outlay, from the domestic resources in the ADP, in the first five months this fiscal. "Agencies prefer to spend money from the government's own exchequer instead of the available foreign aid allocations. It has put the country's fiscal management under further pressure," the ERD official said. Since the donors monitor utilisation of their committed assistance for the development projects, most of the government agencies try to avoid spending the allocated foreign assistance, preferring, instead, the money in the flexible government's exchequer, he said. The government usually takes loans and grants from different bilateral and multilateral donors to complete the country's development work and ensure socio-economic development as its local resources cannot fulfil the entire fiscal expenditure. The ERD official said some big ministries and divisions like Communications, Railway, Bridge, Education and Energy have urged cutting their foreign fund allocations in the upcoming revised ADP against their available resources in the current ADP. He said the major development fund holders, Road and Bridge divisions of the Communications Ministry, have sought less money from their available project aid in the ADP. The Bridge Division has requested cutting by Tk 12.12 billion its total Tk 17.45 billion project aid outlay in the ADP as the multi-billion-dollar Padma Bridge project work has been suspended, the official said. The newly formed Railway Ministry has been failing to implement the Indian US$ 1.0 billion-supported projects, which has forced it to cut the project aid. The ministry has sought Tk 2.72 billion lower fund from its Tk 11.27 billion project aid allocations in the ADP. Another senior ERD official said: "When the government needs more investment to upgrade the country's weak infrastructure and cut hunger, lower project aid demand by the agencies is very unfortunate." Besides, it will exert further pressure on the country's struggling domestic resources, he added. The project implementing agencies should improve their capacity to spend the external aid for the development projects under the ADP, the official said.