Bangladesh spent only 7.3 percent of foreign aid in the first seven months of the current fiscal year, which is the lowest in the last three fiscal years.

The Economic Relations Division (ERD) found a number of reasons behind the slow pace in using foreign aid, including delays in bidding process on the government side.

However, the ERD said both the government agencies and the development partners were responsible for the failure, which will be discussed at a donors' meeting tomorrow.

ERD Senior Secretary Iqbal Mahmud will lead the Bangladesh team at the meeting, while the development partners will be represented by World Bank Country Director Ellen Goldstein.

ERD Additional Secretary Arastoo Khan is likely to make a presentation on “unblocking aid disbursement for better results”.

The ERD has already prepared a report on aid disbursement and the causes of low expenditure.

The average disbursement over the years hovered around 23 percent of the "opening pipeline", according to ERD statistics.

Opening pipeline is the amount of unused foreign aid on the first day of a new fiscal year.

Data from last three years show that the disbursement has gradually been shrinking. In the first seven months of fiscal 2009-10, the amount of disbursement compared to the opening pipeline was 25.18 percent. During the same period in fiscal 2011, the amount was 17.87 percent.

An ERD official said, at the beginning of the current fiscal year, the opening pipeline was nearly $14 billion, which may cross $16 billion at the beginning of the next fiscal year.

Bangladesh receives about 70 percent of its total foreign aid from the WB and the Asian Development Bank (ADB).

In the first seven months of the current fiscal year, disbursement to Bangladesh from the WB and ADB is 33.33 percent and 41.84 percent less compared to the same period last year.

The ERD official said they have reviewed a number of problematic projects and identified the causes for less disbursement.

The major reason on the government side is delay in the bidding process. Despite repeated warnings, the ministries failed to reduce the delay.

Another reason is lodging complaints by unsuccessful bidders against the bidding process, which causes a significant delay, the official said.

During the scrutiny of the tenders, unhappy bidders sometimes raise complaints, which are not baseless often, he added.

Other causes identified on the government side are faulty project documents, unrealistic requisition for fund allocation, delay in land acquisition and a lack of manpower for the projects.

On the development partners' side, one of the major causes is the delayed appointment of consultants.

The ERD official said the development partners do not finance any project without appointing a consultant. In many cases, much delay occurs in appointing consultants.

Another reason is delay in giving approval to contracts. The ERD official said the development partners take much time in scrutiny to detect corruption in a project which causes delay.

Another high official of the ERD said, in the tomorrow's meeting they will try to take some concrete decisions to speed up disbursement of foreign aid. Discussion will take place on holding special tripartite review meeting on problematic projects.

The representatives of the development partner concerned and the line ministry will jointly review the projects having problems to quickly solve those.

The bigger foreign-aid projects will be closely monitored round the year. If necessary, a team of the ERD will go for field level inspection.

The Daily Star/Bangladesh/ 27th March 2012