Donors make fresh aid pledge conditional on early PRS review

from The Financial Express

Bangladesh stands to miss out an opportunity to bring in fresh external assistance unless the government convenes a meeting shortly to review the implementation of the poverty reduction strategy (PRS), officials said.

The officials said the Local Consultative Group (LCG), a platform of the country's bilateral and multilateral donors, has made it clear that unless the government takes stock of the implementation of the PRS, the donor community will not make any aid commitment for the future programmes and projects.

The donor groups have advised the government to hold the PRS Implementation Forum without any farther delay as, they say, the meeting could speed up foreign aid flow, the officials said.

"We've also agreed to hold the PRS meeting in November-December," an ERD official familiar with the government decision told the FE.

Drafted in December 2004, the PRS was approved by the national economic council, the highest policymaking body, in October 2005.

As of December 2006, according to official figures, nearly US$ 7.06 billion development aid was in the pipeline, but the country hauled in a miniscule slice of assistance worth US$294.76 million in the first six months of the current fiscal.
Officials of the Economic Relations Division (ERD) acknowledged that although three years are set to elapse in June next since the release of the PRS, billed as an anti-poverty arsenal, it is yet to yield positive outcome, largely because of the lack of political will.

The BNP-led coalition government, which handed over power to a non-party caretaker authority in October last, made little efforts to implement the three-year anti-poverty plan, notwithstanding the fact it was instrumental in crafting the PRS.
"It (PRS) can be termed a well-planned roadmap. But the previous government set aside no money to implement it," an ERD official lamented.

The country's development partners also voiced their concerns over poor aid utilisation.

Sources said although two quarters of the current fiscal (2006-07) have passed, the government ministries, divisions and agencies could not spend the allocations as the political unrest during the period impinged on the development activities substantially.

The lower aid disbursement during the first six months of the current fiscal is seen as another reason why the government could spend less.

Bangladesh received US$294.76 million in foreign aid during July-December period as against $488.55 million in the same period of the previous fiscal year, according figures tallied by the ERD.

Interestingly, the bilateral donors provided as low as $20.14 million in aid, while the major portion came in from the multilateral lender, with the World Bank (WB) leading the way. The Washington-based lender extended $91 million in loans during the period.

ERD statistics show that of 22 development partners, the contribution of 14 was nil during the period, thus resulting in a drop of 40 per cent in aid disbursement from the corresponding period of the year before.

However, the caretaker government seems to have taken the issue of dwindling aid flow in the current fiscal seriously following a meeting with donors' club last week.
In addition to its lobbying with the donors, the interim authority is learnt to have directed the ERD, the government agency responsible for aid negotiations, to take preparations for holding a Spring LCG meeting sometime in July as desired by the bilateral and multilateral donors.

The LCG constitutes major donors such as the WB, the Asian Development Bank (ADB), the UK's Department for International Development (DFID) and Japan government which provide around 82 percent of the country's total aid, alone