Foreign aid of US$19 billion lies idle as Bangladesh is unable to utilise the assistance despite pledges made by development partners.
While Bangladesh could build the equivalent of five Padma bridges with the money, this amounts to 1.5 times of the current annual development programme (ADP).
On one hand, Tk 100,000 crore (Tk 1 trillion) idles in the country’s banks. On the other hand, the lenders and donors are sitting with more idle money which the government is unable to use.
Almost all of the money is for project support. There is only US$220 million for food aid. Bangladesh faces more problems in spending than earning.
AB Mirza Azizul Islam, who was in charge of the finance and planning ministry during the former caretaker government, thinks that a lack of capacity of the development administration is responsible for not being able to use the foreign aid in 75-80 per cent cases.
Member of general economics division (GED) of the planning commission Shamsul Alam admitted the lack of administrative capacity for not being able to use the foreign aid. According to him, it is necessary to attain the administrative capacity.
The government mainly got the pledges of the financial assistance for different development projects. But, the country failed to get any clearance for the money. It had to return the money in the middle of the year in most cases.
The conditions imposed by the lenders and donors were also issues in some cases.
Economic relations division (ERD) sources said, since independence, the development partners have pledged to provide Bangladesh a total of US$921.5 billion as grants and loans. Bangladesh was unable to use almost 29 per cent of that money. Bangladesh managed to utilise US$654.3 billion in total. The amount of unused money turned to be US$267.2 billion.
Of the unutilised amount, the donor states and lending organisations cancelled assistance of US$80.3 billion over corruption and other issues. The remaining US$186.9 billion is still in the pipeline.
Mirza Azizul Islam said the lack of bargaining skills as well as failure to procure project materials on time are among the reasons. There is also land related complication. The donors sometimes take time to approve the purchase authorisation in the big projects. It makes the projects lengthy and also makes the pipeline bigger.
A joint cooperation strategy (JCS) was formed with the help of donors and lenders for proper use of the assistance. A joint team of government and the delegation of development partners was formed in every sector. Still there was no visible progress, rather making the situation difficult. There was US$88.5 billion unused in the pipeline when this government came to power. The amount more than doubled in the subsequent seven years and now stands at US$186.9 billion.
Planning commission member Shamsul Alam told Prothom Alo that the interest rate of foreign assistance is very low. The foreign aided project does not only bring money, but also technology with it. Therefore, use of sufficient foreign aid is better for the economy, he said. Foreign assistance with low interest rates must be used for high growth.
Why not use: Economic relations division has a project about the use of aid. “Aid effectiveness’ project’s police and coordination expert Muhammad Mizanur Rahman said there is a lack of expertise in implementing the foreign aided projects. And it depends on the bargaining capability for getting clearance about the idle money of the pipeline. It is sad for not achieving the expertise in so many years.
Two thirds of the huge idle money in the pipeline is with the World Bank, the Asian Development Bank (ADB) and Japan. The most foreign assistance is with the World Bank. That is one-fourth of the money in the pipeline or US$49.7 billion. Japan is next, with US$34.8 billion and the ADB with US$33.8 billion.
And 29 donors including Australia, Canada, the UK, European Commission, UNICEF, Islamic Development Bank (IDB) and South Korea have remaining US$68.6 billion.
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