Donors’ money often lies idle: ERD report
Reported by: Golam Moin Uddin UNB Staff Writer
Reported on: Oct 14, 2011 02:17 pm
Reported in: Business
Dhaka, Oct 14 (UNB) – 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).
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.”
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.
It suggested that in its efforts to maximise the benefit of ODA for the people of Bangladesh, the government should step up measures to mitigate the key challenges it faces in achieving its development goals.
Bangladesh’s development partners also need to do more to harmonise their practices and procedures for minimising the burden on the limited capacities of ministries and agencies, and to ensure greater transparency in the use of resources that are reported to have been disbursed to Bangladesh.
The report mentioned that the national planning process is characterised by numerous problems like paucity of trust in institutions and their people as a general lack of trust in different institutions involved in the process could be observed, which is attributed to the absence of a deep-rooted discipline in development planning.
The planning wings or branches of the ministries are not properly set up with appropriate staff, poorly drafted DPPs or TPPs, the departments or agencies within the ministry or division fall short of necessary expertise to formulate DPPs (Development Project Proposals) and TPPs (Technical Assistance Project Proposals).
The report also put forwarded a set of recommendations that include formulation of a consolidated statement of aid policies. An aid policy should enable the government to derive greater benefit from the assistance provided by its partners, and to reduce the often high transactions costs associated with this assistance.
It is true, the report says, there has been marked improvement in the overall management of foreign aid in Bangladesh, but much needs to be done in order to achieve the target for becoming a middle-income country by the year 2021.
Increased effectiveness of the technical working groups, enhanced implementation of the strategic framework, improved aid information management system are needed to be ensured, the report says.
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.