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Utilisation of foreign aid

Dhaka urges donors to help tackle problems

By Staff Correspondent
The Ministry of Finance yesterday reaffirmed the government's determination to make "speedy utilisation of foreign aid" and called upon development partners to help Bangladesh in tackling prob- _ • terns created by iindisburscd ' financial assistance.
In a statement, the ministry noted as an example "the convoluted procedural formalities that militate against speedy utilisation may be simplified only with the active participation of the development partners because many of these emanate from the sources of aid itself.
The statement referred to
the exclusive interview given to this paper by Ambassador Toshio Saiki of Japan, published in the December 23 issue.
In the interview, the envoy had observed that if the committed assistance from his country could not be utilised, then his country might be forced to cut back economic assistance to Bangladesh.
The ministry clarification also touched on a number of points in an editorial of this paper on the same subject published last Friday.
Following is the full text cjf the statement Issued by the
Ministry of Finance:
The Daily Star In Its December 23 Issue published an Interview of Toshio Saiki. Ambassador of Japan in Bang ladcsh wherein it was stated that USS 530 million of Japanese aid to Bangladesh remained unutilised. It was also observed that if the committed assistances could not be utilised speedily and effectively, government of Japan might be constrained to cutback economic assistances to Bangladesh. Subsequently, an editorial was also published In the same dally on December 25 highlighting the statement of the Ambassador and urging the government to ensure speedy utilisation of the foreign aid received from Japan and other sources.
The points raised by the Ambassador and the Editor have been carefully reviewed. It was found that at present Japanese-committed loan to Bangladesh amounted to US 8486 million, out of which USS 172 million had since been disbursed which Is 36% of the committed Ioan. This ratio Is above the Internationally accepted utilisation level In a particular year. According to contractual stipulations this amount will be available for utilisation within a pertod ranging from one to five years.
1n the same paper it was further stated that nearly 46% of USS 440 million Debt Relief Grant (DRG) to Bangladesh remained unused. In fact the total amount of DRO was US8
514.17 million. As per statement of Bangladesh Bank (upto 31.10.92) the balance amount of DRG with the Bank of Tokyo is only 24590.20 million yen l.e. US* 196.72 million. This means US* 317.45 million has already been utilised. The utilisation is 61.74% of the total DRO. It may be mentioned that the time limit for using 86% (US* 168.19 million) of the unutilised grant has not expired as yet.
Recently, the Government ■of Bangladesh has decided to Import crude and refined petroleum using DRG. As a result. the balance of DRG is expected to be fully utilised within the stipulated time.
We feel that the ratio of the undlsburscd aid to the per capita income docs not yield any meaningful economic Interpretation because the nexus between the two is at best ten-unus
The government of Bangladesh appreciates the need for a speedy utilisation of the foreign aid and 1s making a determined effort to improve the present situation which Is explained no less by a set of exogenous variables than the endogenous ones. The support of development partners is crucial to resolve the problem. For example, the convoluted procedural formalities that militate against speedy utilisation may be simplified only with the active participation of the development partners because many of these emanate from sources of the aid Itself.