Amid a downtrend in project aid release, the government has set an ambitious fund disbursement target from development partners in the next fiscal year.
Economic Relations Division (ERD) expects release of $7,175 million foreign fund in FY18, which is much higher than next year’s fund commitments target of $6,000 million, ERD sources said.
The next fiscal year’s project aid release target will be 54.30 percent higher than current fiscal’s revised target of $4,650 million, which is not likely to be achieved, given the current fund release trend.
ERD officials, however, said the target has been set higher as the government wants to make some big projects visible next year, including the Russia-supported Rooppur nuclear power plant.
Disbursement of project assistance slipped year-on-year to $2,310.15 million in the first nine months of the current fiscal year from $2,571.13 million released in July-March period in FY16.
ERD officials attributed the fund release fall to shrinking grants from development partners and slow execution of some big projects being implemented with foreign funds.
Bangladesh has already achieved the lower-middle income status and also hopes to graduate from least developed country (LDC) status by 2027 with improvement on many economic fronts. This success caused the fall in grants flow from development partners, the officials added.
The release of grants slumped year-on-year to $290.96 million in July-March period from $403.71 million a year earlier, latest ERD data suggest.
Disbursement of loans, on the other hand, rose to $2,167.42 million, which was $2,019.19 million in the first nine months of FY16.
Economic analysts blame capacity shortfall of the government implementing agencies in executing foreign-funded projects under annual development plan for the slow release of project aid.
At the very outset of the current fiscal year, aided projects had received a huge blow from July 1 Gulshan attack after which execution of PA projects came nearly to a halt as the incident created panic among foreign people involved with local projects, Planning Minister AHM Mustafa Kamal had said.
As a result, the government had to slash PA allocation in the revised ADP drastically to Tk 33,000 crore from the originally allocated Tk 40,000 crore and compensate the cut with local funds.
Local resources have played a major role in posting 54.56 percent overall ADP implementation performance in first 10 months of the current fiscal year, suggest latest IMED data.
But project aid utilisation rate hit a five-year low at 47.74 percent in first 10 months compared with 56 percent local money spending.
Commitment for funds, on the other hand, overshot the current fiscal’s $6 billion commitment target by a large margin with $11.38 billion loan contract signed with Russia for Rooppur nuclear power plant.
Even without the Russian loan, fund commitment soared to $3,845.50 million in nine months, up from last fiscal’s $3,810.05 million.
After the Russian loan commitment, the country’s aid pipeline increased to as high as $36.5 billion. It is a major concern of the government to curtail the ever increasing pipeline to ease pressure on local resources.
ERD officials informed that power division wants to spend the highest amount of Tk 9,345 crore project assistance in the next fiscal year, while science and technology ministry, tasked with implementing Rooppur nuke power plant, has set a target to spend Tk 8,275 crore in project aid.
In addition, road transport and highways division seek to spend Tk 7,665 in FY18, railways ministry Tk 7,645 crore, local government division Tk 7,602 crore, health ministry Tk 3,315 crore, secondary and higher secondary education division Tk 1,054 crore and bridges division Tk 1,008 crore.