Development spending in the next fiscal may draw higher foreign assistance as the government envisages allocating Tk70 billion more as project aid (PA) in the financial year (FY) 2023-24 development budget, officials say.
Economic Relations Division (ERD) officials say they are likely to allocate Tk990 billion worth of PA in the next budget, 7.60-percent higher than the current Tk920-billion outlay in the Annual Development Programme or ADP.
"Since the global recession and the Ukraine-Russia war have affected Bangladesh's economy in the current fiscal, we are cautious in preparing the next budget," said an ERD official Saturday, indicating that the finance authorities are still having to walk a tightrope in making a budget in keeping with aspired higher economic growth within limited means.
"We have already completed consultations with all the ministries and public agencies on their foreign- aid requirement in the current fiscal as well as in the next. We are now working to finalise the allocations in the current RADP as well as in the next year's outlay," he said.
They will complete their "homework on next year's PA allocations as soon as possible" and then will send it to Planning Commission (PC) for cobbling up the upcoming ADP.
The government usually allocates project aid from the possible foreign- aid inflows in a bid to implement the development projects under the annual-development recipe.
The World Bank, the Asian Development Bank, Japan, AIIB, IsDB, China, and Germany are the key development partners of Bangladesh as they provide billions of dollars every year for bankrolling the development of Bangladesh and alleviating poverty.
Another ERD official says since the government ministries and agencies are seeking lower funds from the foreign-aid portion (PA) in the current FY2023 development budget due to the government- adopted austerity measures, they have also decided to desist from allocating 'ambitious' PA in the coming budget.
The government ministries and agencies have already sought lower PA funds in the upcoming revised ADP as the government's austerity course slowed development expenditures, he adds.
Besides, at least 2-3 of the megaprojects are likely to be completed within this fiscal or in the next fiscal which might reduce the overall PA demands by the ministries and agencies.
The ERD last week completed 6-day consultations with all the ministries and agencies prior to revising the current PA outlay in the Tk2.46-trillion ADP.
Out of the total ADP, the government allocated Tk920 billion as PA, to be mobilised from the foreign development partners.
Meanwhile, the government is likely to frame a Tk3.0-trillion ADP for the next FY2024 with higher allocation of funds from its internal resources, finance ministry officials said.
"Although a lesser quantum of foreign funds (PA) has been proposed to be allocated in the next development budget, the funds from the internal resources would be much higher," a MoF official said.
The government ministries and agencies spent 19.29 per cent of the total Tk 920 billion worth of PA allocations in the ADP during July-November period this FY2023, Implementation Monitoring and Evaluation Division (IMED) data showed.
"After drafting the PA allocations for the next FY2024, we will send it to the Planning Commission for finalising ADP," the ERD official said.
The global economic recession stemming from the back-to-back adversities of pandemic and war has affected Bangladesh's economy, too, forcing the government to go for belt-tightening on a national course of austerity.
Notwithstanding the headwinds still blowing, the government has already outlined a larger budget for the next fiscal with an overall outlay of over Tk 7.0 trillion, evident in keeping with a higher trajectory of development it is pursuing to meet the requirements for Bangladesh's graduation from the LDC status.
