Finance Minister AMA Muhith said the outlay of the national budget would be larger if the disbursement of annual foreign assistance was raised. He said around $24bn of foreign assistance is now in the pipeline and only 20% of the sum will be disbursed.
“The capacity of disbursing foreign aid is below $5bn while a budget size is more than Tk2,60,000 crore. This is not good enough,” he told journalists after a meeting with top bureaucrats at Bangladesh Secretariat yesterday.
Regarding the slow disbursement of foreign aid, the minister blamed the project directors and tagging of conditions by the donors.
He said procedural bottlenecks are also responsible for the slow disbursement.
The project directors discuss with the officials of development partners for disbursement of funds. which is also a time-consuming matter, he said.
Muhith said there should be one project director for a project to speed up the process.
“Prime Minister has strongly directive to appoint one project director for one foreign-funded development project. It may increase the speed.”
In January, the government was forced to cut the annual foreign aid disbursement target to $3.30m for the current fiscal year due to slow implementation of projects by various implementing agencies.
The foreign aid commitment to Bangladesh had plunged by 60% to $896.6m in July-November period in 2014 compared to $1.44bn in the corresponding period last fiscal, Economic Relations Division data showed.
As per the ERD, the foreign assistance disbursement during the 5-month period was recorded at $902m, compared to $887.3m in the corresponding period of last fiscal year.
The government received a record $3.0bn foreign aid in the FY2013-14 following a significant rise in disbursement by World Bank and China.
In the FY2012-13, the government received nearly $2.78bn foreign loans and grants from the development partners.