Govt starts assessment before project aid cut

Poor implementation of foreign-aided projects has prompted the government to cut its project aid (PA) in the current Annual Development Programme (ADP), officials have said.
Under the initiative to cut the project aid, the Economic Relations Division (ERD) sat with top officials of the relevant ministries on Thursday to assess their actual foreign aid requirement for projects in the current financial year (FY), 2014-15, they have also said.
"We have started consultation with the ministries this week and it will continue up to next week. It is aimed at revising their project aid allocation, taking the poor project implementation scenario into account," said ERD joint secretary Farida Nasrin.
The government's move to slash PA has been initiated following an uncertainty over spending of allocated foreign fund under the current development budget, said a senior ERD official.
The government has allocated Tk 277 billion as project aid under Tk 803.15 billion ADP outlay in the current FY. During July-October period of the fiscal, the government bodies have spent Tk 25.76 billion, which is only 9.0 per cent of the total allocation.
On Thursday, the ERD sat with some major project implementing agencies, including Power Division, Energy Division, Road Transport and Bridges Ministry, Industries Ministry, and Railway Ministry.
Farida Nasrin said: "We will meet all the ministries to consult about their ongoing projects till Monday to assess their actual fund requirement in the remaining period of the current fiscal. Then we will finalise the revised project aid allocation in the current development budget."
She said they have taken a realistic approach to assess the ministries' actual fund requirement.
"If the ministries demand higher allocation of fund, we will not grant it as per their demand. First we will check their previous performance in the last couple of years, and then we will allocate the money."
The ministries, during consultation meetings in the previous financial years, used to seek lower fund than their actual allocation in the development budget. It prompted the government to cut the overall allocation in the Revised ADP (RADP), she added.
Another ERD official said ERD and the Planning Commission are forced to cut the ADP in the last half of every fiscal due to poor project execution by the ministries and agencies. In the previous FY, 2013-14, poor project implementation prompted the government to cut foreign aid spending by nearly 14 per cent to Tk 212 billion in the ADP. The government allocated Tk 245.63 billion PA for the donor-supported projects in the original Tk 658.72 billion outlay, ERD officials said.
They said the ministries' performance was worse in spending PA, supplied by the foreign donors, compared to the government's own fund.
During July-October period of this fiscal, the government bodies spent Tk 25.76 billion, 9.0 per cent of the total Tk 277 billion PA allocation in the development budget.
They, however, spent Tk 78.62 billion, 15 per cent of the total Tk 526.15 billion allocation from the government's internal resources.
Out of the total Tk 803.15 billion outlay in the original ADP, Tk 526.15 billion or 65 per cent has been allocated from the government's own resources, and the rest Tk 277 billion or 35 per cent from the external resources as project aid to implement nearly 1,100 projects.
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