Bangladesh News

Foreign aid dropped by a staggering 53 percent in the first three months of the current fiscal year due to donor concern over pre-election political instability and slow implementation of foreign-funded development projects.

Bangladesh Bank statistics show that during July-September in the current fiscal year, aid inflow was $ 129.26 million as against $273.84 million during the corresponding period in the previous fiscal year.

Aid figures dropped every month from July to September this fiscal year compared to those in the corresponding months of last fiscal year.

In July this year, aid inflow was $41 million, showing a sharp fall from $87 million in July last year.

In August, $55.77 million was received as foreign aid compared to $76.82 million in August last year.

The amount of foreign aid was $32.44 million in September this year while the figure was as high as $110.87 million in the corresponding month last year.

In addition to the fall in gross foreign aid by 53 percent, net foreign aid has dropped by 80 percent.

Although $129 million aid was received in the first quarter of this fiscal year, the government had to repay $94.07 million of previous aid, leaving a net amount of $35.19 million. The net foreign aid in the corresponding period of last fiscal year was $179.64 million.

Planning ministry sources said the immediate past government’s concentration on domestic-funded projects to boost its profile before the upcoming elections effectively sidelined donor-funded projects under the Annual Development Programme (ADP). The domestic-funded projects for building local infrastructure were aimed at getting popular support in the elections.

The sources also said such projects created greater scope for corruption as these are not put under rigorous scrutiny, unlike donor-funded projects.

Donors also held back a significant amount of aid due to concern that the donor-funded projects will not be properly implemented as, they feared, the past government would not be able to fulfil foreign aid conditions before handing over power to the caretaker government (CG), said sources in the Economic Relations Division (ERD).

Recently, an Asian Development Bank (ADB) representative met with Finance and Planning Adviser to the CG Akbar Ali Khan to inform him that a $500 million project would be deferred until the next government takes over after the elections.

Several other donor agencies are taking similar steps, sources said.

But a top ERD official said that as per directives from the finance and planning adviser, they have prioritised expediting the donor-funded projects.

The ERD has also started identifying specific impediments to donor-funded projects that have stalled fund disbursement and implementation of those, he added.

The finance adviser yesterday met the Local Consultative Group members and requested them to take steps so that the funds for foreign-aided projects are released quickly.