Proposed policy on foreign aid stuck in uncertainty

Jasim Uddin | Published: 22:33, Oct 07,2017 | Updated: 23:56, Oct 07,2017

 
 

A file photo shows workers drilling a site for geographical survey for the Dhaka Metro Rail Project, which is being funded by Japan, in the capital. The government’s move to formulate a policy on foreign aid is stuck in uncertainty in the face of opposition from international lenders and development partners on some provisions of the proposed policy including limiting the ceiling of expenditure for foreign consultants in technical projects. — New Age photo

The government’s move to formulate a policy on foreign aid is stuck in uncertainty in the face of opposition from international lenders and development partners on some provisions of the proposed policy including limiting the ceiling of expenditure for foreign consultants in technical projects.
Economic Relations Division of the finance ministry proposed to restrict the expenditure within 25 per cent of total project aid along with the government’s right to cancel the contract of foreign consultants or experts on the ground of performance and violation of the ethics and conduct code of the government.
In the draft policy, the government also discouraged resource mobilisation worth less than $10 million for a single project which also drew resistance particularly from bilateral and small development partners.
The government prefers programme support through joint financing or pooled funding instead of small stand-alone projects as it contributes high transaction cost but brings low development results, according to the policy.
Officials said that the ERD took the move to formulate the National Policy on Development Cooperation to discipline mobilising and managing foreign loans and grants and ensure effective use of foreign funds.
In March, the division published the final draft of the policy which discouraged foreign loans and grants with excessive conditions, higher transaction cost and less aligned with national priorities, they said.
But many development partners, excluding large ones like World Bank and Asian Development Bank, are opposing some of the provisions of the policy, they added.
The draft says that technical assistance shall be based on national demand and integrated into a comprehensive national capacity development strategy to meet the gaps in the country’s technical and knowledge capabilities.
Local experts shall be appointed in TA project implementation as far as possible. In case of appointing foreign consultants or experts, they must have experiences of working at least in three countries and the cost should not exceed 25 per cent of total project aid, it says.
‘No consultant and expert or project staff shall be recruited without informing and approval of the government,’ the draft policy says.
The government shall have the right to cancel or recommend cancellation of contract of any consultant or expert, who is deemed not to be beneficial to the implementation of the project or achieving its goals or who breaches the ethics and conduct code, it adds.
Officials of the ERD said that the development partners sought complete withdrawal of the provision, particularly the ceiling of foreign consultant cost and the government’s right to cancel their appointment as currently, for many projects, they can bring back even up to 80 per cent of the aid under technical assistance project through foreign consultants.
International donors argue that Bangladesh still lack international standard consultants and experts.
ERD found that on an average 70-80 per cent of foreign aids under TA projects go back to the donor countries, they said.
It also found that many foreign consultants and experts did not possess the necessary qualification for the job and they work with the support of local experts, they added.
A high official of the ERD last week told New Age that they had already held several meetings with the development partners which brought no results.
The ERD may bring some flexibility regarding the cap of expenditure and resource mobilization for small projects, he said.
The ERD will hold an inter-ministerial meeting to decide on the issue as there is pressure from the implementing ministries for fixing the ceiling of the cost of foreign consultants.
Then, a summery will be sent to finance minister AMA Muhith for his decision, he said.

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