The government is set to cut development project aid by 15 per cent to Tk 510 billion for lower-than-expected utilisation of the same in the first half of the current fiscal year (FY).
Economic Relations Division (ERD) officials said on Wednesday they recommended slashing some Tk 90 billion in the revised annual development programme (RADP) from the current Tk 600 billion project aid allocation.
"Since ministries and divisions sought lower funds than their current allocations in the budget, we've cut the project aid outlay for the upcoming RADP," said a senior official.
"We've already sent it to the Planning Commission (PC) for finalising the RADP for the current fiscal year (FY), 2018-19," he added.
The government framed a Tk 1.73-trillion ADP for FY '19, providing Tk 600 billion project aid.
In the development programme, project aid comes from different development partners as foreign aid to finance public-sector development work.
Meanwhile, the lower development budget execution rate with project aid is ballooning the unutilised external resources, sources said.
The unutilised foreign aid in the pipeline is now stands at more than $30 billion, ERD officials said.
Officials of some executing agencies said the government's complex procurement system and approval procedure of development partners are key reasons for the delay in foreign aid expenditure.
This resulted in the demand for lower funds at the end of the year, they explained.
"We consulted ministries and agencies more than a month ago. They sought lower funds than original estimations. It has now stood at Tk 510 billion," said a senior ERD official.
Official data shows 37 per cent of the Tk 600 billion project aid outlay in the original ADP was spent in the first seven months (July-January) of FY '19.
The ERD finalised allocations for ministries and divisions after a thorough review meeting with project implementers a month ago in an attempt to formulate the RADP, the official disclosed.
The PC is also working to cut the outlay from the internal resources too alongside the allocations from external resources, commission officials said.
Since the donors monitor utilisation of their committed project aid, government agencies mostly try to avoid spending the allocations, preferring instead the money in the government's exchequer, they added.
