Foreign aid disbursement, commitment mark decline

Poor project execution, pandemic blamed

September 25, 2020 10:07:05

The disbursements of foreign aid declined by about 29.5 per cent to US$528 million in the first two months of the current fiscal year (FY) than that of the corresponding period of last FY, according to provisional data available with the Economic Relations Division (ERD).

“The poor rate of implementation of the projects supported by foreign loans is the main reason for the lower disbursement” during the July-August period of FY2020-21, a senior official at the ERD said on Wednesday.

He said the country has received a huge volume of project aid over the years, but a large part of it has remained unused. That could be one of the reasons for lower disbursement of loan.

Another source listed the impact of the Covid-19 pandemic on the developed economies as a reason for the lower disbursement and fresh commitment of aid.

During the first two months of FY2019-20, the external development partners disbursed medium-and long-term (MLT) concessional loans and grants worth $748.74 million, the ERD figures show.

According to the Implementation, Monitoring and Evaluation Division (IMED), the government’s project implementation ministries and agencies showed poor performance in July-August period. They could spend only Tk 22.52 billion or 3.19 per cent of the total foreign aid component worth Tk 705.02 billion.

They, however,utilisedTk57.73 billion or 4.29 per cent of the total Tk 1.34 trillion funds from the government’s internal resources under the annual development programme (ADP)for the FY2021, the IMED data showed.

Of the $528 million disbursed by the development partners, $509.53 million came as loans and $18.48 million as grants during the period under review, the ERD data showed.

The foreign aid commitment was also lower during the Jul-Aug period of the current FY2021.

The development partners made $354.06 million worth of commitments for the two-month period of this FY, the ERD data showed, as compared to $1.45 billion in the same period of last FY.

Out of the total $354.06 million commitments, the development partners had made commitment for $320 million in loans and $34.06 million in grants during Jul-Aug period of the current FY2021.

The senior official said: “Since a big Chinese loan (nearly $1.0 billion) deal was signed in early FY2020, so the commitment was showing higher compared to the same period this FY2021.”

But no such a big chunk of foreign aid deal is yet to be signed during this FY2021, resulting in a weaker MLT balance and grant receipts, he added.

The ERD official said: “Although the commitment has been showing a downward trend in the first couple of months, it will pick up in the last half of the current fiscal.”

Meanwhile, the government paid back US$ 266.23 million against the total MLT loans during July-August period of this FY2021.

The government repaid $191.68 million in interest and $74.55 million in principal amount against the outstanding external MLT loans, according to the ERD.

In the same period of last FY2020, it repaid total $241.36 million worth of interest and principal amount against outstanding loans.

Development partners including the World Bank, Asian Development Bank, JICA, UKAID and Islamic Development Bank disburse concessional assistance every year for the development of Bangladesh.

In the last FY2020, the government received $7.3 billion worth of funds from the development partners.


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