The volume of foreign aid has dropped by Tk9,800 crore, or 13.65 percent, in the revised Annual Development Programme (ADP) due to slow project implementation.
Although the government had targeted to use Tk71,800 crore foreign aid in the 2019-20 fiscal year, the amount has fallen to Tk62,000 crore in the revised ADP.
After a series of meetings with the concerned ministries and divisions, the Economic Relations Division (ERD) set the new target of foreign loans for the current fiscal year. It sent the revised allocation proposal to the Planning Commission on Wednesday.
Once the Finance Division finalises fund allocations, the revised ADP will be tabled at the National Economic Council (NEC) for approval in early March.
According to the Implementation Monitoring and Evaluation Division, the ministries and divisions spent only Tk17,495 crore, or 24.37 percent, foreign aid in the first six months of the current fiscal year.
ERD officials said allocation slipped the most for the metro-rail (MRT-6) project – a top-priority project for the government.
They added that the MRT-6 implementing agency Dhaka Mass Rapid Transit Company Limited (DMTCL) has proposed a Tk2,977 crore cut in foreign aid. The original ADP had a proposal of Tk5,539.50 crore in foreign aid.
Sources at the implementing agency claimed slow implementation of the project has dragged down the project allocation.
ERD officials said they also sent a letter to the Roads and Highways Department seeking an explanation as to why the implementing agency failed to spend the allocated foreign aid.
DMTCL sources said spending for the projected amounted to Tk1,448.21 crore till December last year, against the total project allocation of Tk7,212.63 crore in the current fiscal year.
The concerned authorities expressed doubts over spending the remaining Tk5,764.42 crore for the metro-rail project in the last six months of the current fiscal year as the project witnessed only a 20.08 percent progress in the first half.
"The spending fell short owing to several practical issues despite proper initiatives," said a DMTCL representative at a Roads and Highways Department meeting.
The representative also claimed the project also got more allocation in the current fiscal year by mistake.
The government had planned to spend the ADP allocation for the metro-rail project in FY2021-22, aiming to inaugurate the line on December 16, 2021, marking the Victory Day.
MRT-6 Project Director Aftabuddin Talukder could not be reached for comment despite repeated attempts.
Additional Director of the MRT-6 project Abdul Baki Mia refused to comment on the issue, saying he did not have a permission to do so.
The project was taken up in 2012, involving a cost of Tk21,985 crore. Of the amount, the government will provide Tk5,390.48 crore while JICA is supposed to provide Tk16,594.59 crore.
Allocation for the JICA-funded Bangabandhu Railway Bridge on the Jamuna River shrunk slightly, while allocation for the Shahjalal International Airport expansion project remains the same.
Though no Chinese development project got fund disbursement in the current fiscal year, foreign aid allocation for them remained unchanged.
The revised allocation for the Rooppur Nuclear Power Plant and the Karnaphuli Tunnel also remain the same.
However, the revised ADP raises allocations for the Matarbari coal-fired power plant and the Dohazari-Cox's Bazar rail line.
Allocation for most of the sectors including science and technology, health, education, transportation, water resources, rural development and agriculture has also dropped.
Poor revenue collection narrows the scope of raising allocation for a project, said ERD officials. Apart from this, massive cuts in foreign aid will also put the budget implementation in a squeeze.
Economists said that ministries and government bodies have been showing reluctance in using foreign aid from the very beginning. They are more interested spending from government funds which have lax terms regarding accountability and transparency.
"Fund disbursement is poor due to slow project implementation," said Dr Ahsan H Mansur, executive director of the Policy Research Institute.
Reluctance of the government officials to use foreign aid has added up to the failure, he said.
"Foreign aid is often returned due to failure of implementation. Then the pressure mounts on government funds, taking away allocation from major sectors like education, health and social safety."
Tougher terms and conditions and bureaucratic complexities of development partners often make it difficult to use foreign aid.
ERD Secretary Monowar Ahmed at a recent press conference urged the development partners to be more flexible. He also emphasised maintaining transparency and accountability throughout the project.
Planning Secretary Nurul Amin told The Business Standard that it is difficult to specify the amount spent by the government.
"The ministries and divisions have proposed their demands which has been forwarded to the Finance Division," he added.
The division will dictate the ADP allocations after fixing a ceiling of government funds.
The size of the ADP for the current fiscal year is Tk215,114 crore, while a total of Tk56,716 crore, or 26.37 percent, has been spent in the first half of FY2019-20.
Revenue shortfall stood at 23.05 percent in the first half of the current fiscal year.
According to the National Board of Revenue, the collection target was Tk136,668 crore during the period, but only Tk15,161 crore was collected.
With revenue deficit and will provide development allocation, the government will be more dependable on the Bank loan.
In the current fiscal year, the government had set the target to borrow Tk47, 363 crores from the bank system.
However, in the six months (July-December), the government borrowed Tk48,015crore.