Foreign aid policy in the works

The finance ministry is set to formulate a foreign assistance policy that will make the government, development partners and NGOs accountable for not making the best use of aid money.

Called the ‘National Policy on Development Cooperation’, it aims to provide a consolidated framework for mobilising and managing development cooperation in Bangladesh, the Economic Relations Division said in a statement yesterday.

The development partners’ commitment and disbursement will be regularly released in the publicly accessible Aid Information Management System, according to the draft policy, which was released yesterday.

On the basis of this, the ERD will publish an annual report on how effectively the flow is being managed by the development partners and the government.

The list of approved foreign-aided projects will be displayed on the ERD website and, where appropriate, on the district websites for public access to project objectives and intended development results, according to the draft.

The ERD, the relevant ministries, the planning ministry and the representative of the development partners will together evaluate the progress in implementation of the foreign-aided projects.

Often, allegations are made that large sums are spent on consultancy and the policy aims to crack down on this practice.

The draft policy said the government will have an active role in all stages of recruitment of consultants and professionals and ensure that they are need-based.

“No consultant and expert shall be recruited without informing the government.”

The government will have the right to cancel or recommend cancellation of the contract of any consultant or expert if it deems their service to be beneficial to the implementation of the project or achieving its goals, it said.

The draft policy said the government will attach the highest priority to concessional loans with the least number of conditions, with its preference being that all aid be untied.

Some development partners continue to “tie” their aid, imposing restrictions relating to the source or nature of the goods and the services to be used.

Tied aid is contrary to the spirit of international agreements on development effectiveness and has the well-known consequence of reducing the real value of assistance by limiting competition in bidding and limiting the use of local markets.

Furthermore, in recent times, some bilateral donors bypassed the finance ministry and pursued the line ministries regarding extending loans provided that the equipment will be purchased from the donor’s home country or a company of their choice gets the job.

The pricing invariably tends to be much higher on such deals, and the project’s evaluation is also not done independently in such cases. The government will discourage offers of foreign assistance where it considers: the transaction costs to be unacceptably high, alignment to the government's priority to be insufficient, conditionality to be excessive and contrary to the country's existing laws.

In case of foreign aid, the ERD will prepare a priority list in consultation with the line ministry and planning ministry.

If the project involves over Tk 30 crore, a feasibility study will have to be conducted, and after completion of the primary work of the project, it will have talks with the development partners about the project aid.

A fund search committee will be formed in this regard.

The draft policy has also proposed bringing in transparency in the foreign aid received by the civil society and nongovernmental organisations.

The policy said the civil society and NGOs can take funds from foreign sources but they must be aligned with the national priority.

The development partners will have to report their commitments and disbursements through non-state stakeholders to AIMS to ensure that the government is aware of their contribution and to avoid overlap or uncoordinated work.

For monitoring at the local and district levels, there will be an institutional body titled Zila Unnayan Samannay Committee, which will regularly inform of the progress through the ERD website.

The policy said the aim of all the processes is quick utilisation of foreign aid.

An inter-ministerial committee under the leadership of the ERD senior secretary developed the policy.

The draft has been uploaded to the ERD website and will be finalised based on public opinions.