Foreign fund to be cut by Tk 5,000cr in revised budget

Foreign aid is likely to be cut by Tk 5,000 crore in the current fiscal year’s revised budget despite a significant increase in its utilisation.

According to an Economic Relations Division (ERD) draft estimate, Tk 52,050 crore is set as the revised target for foreign aid utilisation in FY17-18 against the original estimate of Tk 57,000 crore (about $7.12 billion).

An ERD official said the division and the planning ministry would hold another meeting with ministries and divisions concerned in March when there would be a decision on the final estimation.

The high official said this time the pace of foreign aid utilisation was higher than in the past years as the implementation of several mega projects sped up. The official said over $6 billion might be used in the current fiscal year.

Though the government is yet to cross the $4-billion mark in a fiscal year in terms of foreign aid utilisation, it now believes that its efficiency to spend the money has sufficiently increased over the last couple of years.

The country saw the highest utilisation of foreign funds last fiscal year — $3.56 billion — in development projects.

According to the ERD statistics, it was $2.57 billion in the first six months, which was 94 percent more than that in the same period the previous fiscal year. The official said more than $3 billion was utilised by the end of January this year.

According to the ERD sources, one of the mega projects was the foreign-funded Rooppur power plant, which got an allocation of Tk 10,186 crore this fiscal year. Of the funds, around Tk 8,000 crore will come from Russia.

The official said the project was going on as per schedule and almost the entire amount would be spent this fiscal year. In November, the ERD reviewed progress in the implementation of 63 ongoing foreign-funded projects — each having Tk 200 crore or more in aid allocation. The projects involve a total of Tk 45,442 crore.

It found the pace of implementation in many of the projects slow.

One such project is the Padma rail link for which Tk 4,950 crore in foreign aid was allocated in the current fiscal year. Financed by China Exim Bank, the project is expected to complete by 2022 at a cost of Tk 34,988 crore. The rail link will connect Dhaka with the country’s southern region via the Padma bridge.

The government plans to open part of the rail link during the Padma bridge’s inauguration scheduled for later this year.

Seeking anonymity, an official of the railways ministry told this correspondent that the primary work in the project had been done. But they could not start the main work as the ministry is yet to sign a loan agreement with China Exim Bank. Even a high powered government team was scheduled to visit China last month to expedite the signing of the loan agreement, but it was suspended.

The ERD official said the prerequisite high level approval of the Chinese government has come and the loan agreement may be signed this year or the next. However, another ERD official said even if the loan agreement was signed, the expected utilisation of foreign fund in the project would not be fulfilled.

China in the last one year signed over $1 billion-worth loan agreements for various projects including the Karnaphuli tunnel. The utilisation in China-funded projects would increase this year compared to previous years.

Utilisation of Japanese and Indian funds in projects has also increased.