Tk 890bn project aid target likely for ADP in FY22

Hasibul Aman

13 April, 2021 12:00 AM printer

The government is setting its foreign resource mobilisation target much higher in next fiscal’s ADP despite the corona-induced slowdown in project implementation.

Economic Relations Division (ERD) has set the share of project assistance (PA) in ADP for FY 2021-22 at Tk 890 billion, which is Tk 184.94 billion higher than that of the current fiscal and nearly Tk 260 billion larger than the revised target, ERD sources said.

ERD has placed the foreign resources mobilization proposal to the Planning Commission, which is now preparing the next fiscal’s development budget. 

Given the current PA utilisation trend, economic analysts think that the target is ‘ambitious’ and achieving it will be very challenging amid stringent measures being taken to control the second wave of coronavirus in the country.  

In the 2020-21 fiscal year, the government expected collecting Tk 705.02 billion in ADP money from the development partners

But after six months, it had to slash the amount by Tk 75.02 billion to Tk 630 billion and the whole ADP figure only saw a cut in PA’s share this fiscal. The revised target, however, is not likely to be achieved at the end of the year as only Tk 244.69 or nearly one-third of project assistance allocation has so far been spent in the first eight months, IMED data suggest. 

ADP spending as a whole was also hovering around 33 per cent during the July-February period of the 2020-21 fiscal year, leaving little room for hope of a bullish ADP performance this year.

“Current fiscal’s ADP implementation pace is yet to reach the level of the last fiscal year. In that case, the new target is definitely ambitious,” said Dr Zahid Hussain, former lead economist at the World Bank’s Dhaka office.

Dr Zahid sees no problem in commitment from the development partners but in the fund disbursement.

Commitments for new funds or budget support may come from development partners to help the government fight the corona crisis, but spending the money would be the key, he explained.  

“It is very important to accelerate the utilization of foreign resources,” he said.

“If projects’ work does not get momentum, how the new project assistance target will be achieved?” he questioned. 

ERD officials don’t agree with the observation that the set target is ambitious.

They argued that many large projects are being implemented now with foreign money, which requires money.

An ERD high official seeking not to be named said the target has been set in line with the demand placed by the ADP implementing ministries or divisions.

He said the target was set earlier when there was no crisis on the second wave of coronavirus. Despite that, he thinks the target is not ambitious. 

ERD set the target based on 7 months’ ADP figures after holding a series of meeting with the different ministries and divisions from late February to early March to assess their needs, ERD sources informed.

In the 2019-20 fiscal year’s original ADP, the government had estimated Tk 718 billion to come from foreign sources. Later, the target was downsized to Tk 620 billion and finally, Tk 470.44 billion could be spent in the year.

Similarly, Tk 470 billion project aid could be spent in the previous fiscal out of Tk 600 billion original allocations and Tk 510 billion revised allocation.

In the 2017-18 fiscal year, PA utilization finally stood at Tk 523.37 billion against Tk 604.16 billion original allocations and Tk 520.50 billion revised allocation.