$24b in foreign aid lying idle

A record $24 billion of foreign aid has piled up due to the ministries' failure to utilise resources timely.

At the beginning of the fiscal year, the amount of unused foreign aid stood at $19 billion and the government aimed to disburse at least 20 percent of the sum, Finance Minister AMA Muhith told reporters after a pre-budget meeting with secretaries yesterday.

He said the target was to spend less than $4 billion this fiscal year. In the first eight months, $1.85 billion was disbursed, according to the Economic Relations Division.

At the meeting the finance minister said the disbursement process has become lengthy, as various procedures set by the donors have to be followed.

In practice, the amount is deposited in the pipeline and is ready for use right after the agreement is made with bilateral or multilateral donors.

“What actually happens is that we are not ready to use the amount right away,” he said.

The frequently changing project directors and the responsibility of a host of projects on each director also do not help matters.

But the prime minister has taken strict steps in this regard, he said.

Besides, the ministries do not have any annual procurement plan, which also delays project implementation, Muhith added.

He also briefed reporters on the progress regarding the appeal for budget support from the World Bank and the International Monetary Fund's (IMF) Extended Credit Facility (ECF) loan. “We will get the budget support,” Muhith said, adding that any loan will be tagged with conditions.

The conditions set by the WB for budget support are similar to those of the IMF's ECF loan, he added. The finance minister said the WB proposed introduction of an automated pricing formula for electricity and fuel prices to get budget support.

“But I have rejected it,” Muhith said.

The finance minister also said the last two instalments of the ECF loan will be received by June this year.