ERD report sees donors' fund idle
Lack of coordination among agencies and departments, gap between commitment and disbursement and weak participation in the negotiation process hamper the implementation of donors-aided development projects in the country.
“There's a gap between commitment and disbursement as sometimes ministries don't know how much they have in the pipeline. Sometimes, development partners divert money from projects to mitigate emergencies caused by disasters. Sometimes projects are late to start because of litigation over land ownership. So, donor money lies idle,” says a report of the Economic Relations Division (ERD), a government body.
The report titled “A Document on Aid Management in Bangladesh-A Review of Policies and Procedures” says, “Despite serious commitment by the government and its development partners,…development effectiveness remains a challenge.”
It says the pattern of foreign aid has undergone a striking transformation in Bangladesh during the last four decades with average yearly aid reaching US$ 1.3 billion over the 40-year period.
Although aid only accounts for roughly 2 percent of GNI, it constitutes almost 50 percent of the country's annual development budget. In fiscal 2009-10, the amount of foreign aid disbursed was US$ 2.2 billion.
It says the dominant role of the Planning Commission in programming and budgeting is necessary because individual line ministers do not have the strength to withstand “lobbying” and “political interference”.
Besides, the complex process is meant to reduce the risk of corruption and misuse of funds. “Contrary to this traditional school of thought, the reality in aid management is that the complexity of the process contributes to delay and efficiency loss, and reduces transparency and accountability.”
The report presents the findings and recommendations of a review of policies and procedures relating to aid management in Bangladesh. The assessment is based on the analysis of relevant studies and other documents as well as discussions with a number of government officials, involved directly or indirectly, with aid management.
According to the report, the aid management procedures followed by the government suffer from a number of general weaknesses, including substandard format for loan agreements.
There are problems of coordination among agencies and departments involved in aid management. For instance, it was reported that there is a lack of coordination among the debt management department, foreign exchange department and statistical department of the Bangladesh Bank.
“There is weak participation in negotiation process where national priorities should be mentioned properly. Implementing ministries are violating the planning discipline, as a result project suffers seriously and revisions are needed,” the report says.
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