Ministries asked to speed up use of foreign aid

The finance ministry has sent an alert letter to secretaries of all ministries and divisions in the backdrop of their failure to use huge accumulated foreign aid.
Finance Secretary Mohammad Tareq last month urged the secretaries to make a proper use of foreign aid and stem rush expenditure at the end of a fiscal year.
According to Economic Relations Division statistics, at the start of the current fiscal year, the amount of foreign aid in the pipeline rose to a record $13 billion as the ministries and departments failed to make proper use of the aid money.
As a result of the failure to utilise foreign aid, the government's bank borrowing increased and the balance of payments is also under significant pressure.
A finance ministry official said the finance secretary wrote the letter so that the ministries start working sincerely for implementation of the budget from the start of the year.
“The ministries should delegate financial powers to directorate and offices under them and monitor regularly the implementation of budget and take steps for proper use of foreign aid,” Tareq told the secretaries.
Like every year, it was also seen last year that the government spent more money at the end of the fiscal year for implementing the annual development programme (ADP). It spent Tk 7,000 crore in the last month (June) of the last fiscal year, whereas in the earlier months it spent Tk 400 crore to Tk 3,000 crore on an average.
The bank borrowing was Tk 2,500 crore on the last day (June 30) of last fiscal year.
Tareq in his letter said the review of the implementation of ADP in the last few years shows that the government has limitations in implementing the budget.
“Traditionally the rush of expenditure at the end of a fiscal year also has an unreasonable tendency which destroys the quality of expenditure, and financial and budgetary discipline,” the secretary said.
He urged the ministries to start working from the start of the year in line with their expenditure and procurement plans.
The finance secretary reminded the secretaries about the size of this fiscal year's budget (Tk 1,63,589 crore), which is 18.2 percent of GDP, and said, if it is not implemented properly, its cascading effect will never reach the beneficiaries.
Tareq also said the credit being accumulated in financing the budget deficit will fall on the future generations. To ensure an intergenerational equity, the best possible use of investment cost and highest rate of return have to be ensured.
The finance secretary specially said, in many cases important expenditure plans are not implemented for a lack of initiative by the implementing agencies.
The finance ministry said, not only the finance secretary, the Bangladesh Bank also advised the government to make proper use of foreign aid, saying, otherwise it will have a negative impact on the overall macro-economy.
The BB board of directors in an exclusive meeting with the finance minister last month projected the concerns.
The finance ministry official said the increase in foreign aid in the pipeline was more in the last five to six years. According to ERD statistics, four years back the unused foreign aid in the pipeline was $6.6 billion which has increased to $13 billion in the first month of the current fiscal year.
Of the unused foreign aid, the World Bank's share is $5 billion, Asian Development Bank's $2 billion and Japan's $1.5 billion.
ERD officials said, last fiscal year a huge amount of money was accumulated in the pipeline. The amount of commitment was $6.08 billion against the disbursement of $1.8 billion.
Last year the government received 15 percent less aid in terms of disbursement compared to the previous fiscal year, when $2.07 billion was received in foreign aid.
In the current fiscal year the government hopes the total commitment for foreign aid would be about $3 billion.