WB’s leading economist in Dhaka Sanjay Kathuria and senior economist Zahid Hussain are seen at a post-budget discussion in Dhaka on Wednesday. — New Age photo

The World Bank on Wednesday expressed doubt about availability of the expected foreign aid in the new fiscal year, which shows that a quick solution to the dispute between it and the government over the Padma Bridge graft is unlikely.
Sanjay Kathuria, the WB’s leading economist in Dhaka, at a post-budget parley said that disbursement of the projected $2.3 billion loan in FY2012-13 by the donor agencies was uncertain.
He pointed out that government received foreign aid of only $1.4 billion in the outgoing fiscal year as a large amount of foreign aid was not disbursed by the donor agencies.
The WB, Asian Development Bank, Japan International Cooperation Agency and Islamic Development Bank did not disburse a single penny of the $2.3 billion loan to build the Padma Bridge because of alleged corruption in the government’s tender process.
The WB, which is committed to lend $1.2 billion for the Padma Bridge project, brought allegations of corruption against former communications minister Syed Abul Hossain almost ten months ago.
It put an embargo on loan disbursement and urged the government to launch a thorough investigation, but the government denied the allegation and refused to take any action.
Recently, the WB has reportedly asked the government again for proper investigation against the former communications minister and other former officials of the Bridge Division who demanded a hefty bribe from a Canadian bidder which was vying for supervision work of the bridge project.
Sanjay Kathuria, however, told reporters that the Economic Relations Division and WB were trying to come to an undferstanding.
He stressed the need for ‘concentrated efforts’ by the two sides to clear up the tangle and resume funding of the Padma Bridge.
Senior WB economist Zahid Hussain said that the lower-than-expected foreign loans might force the government to borrow from the banks to meet the budget deficit.
He feared that the higher-than-projected bank borrowing might deprive the private sector of the loans it badly needs to continue operating efficiently.
The economists also expressed concern at the ballooning subsidy and its destabilizing impacts on the macro-economy.
They welcomed the government’s decision of introducing proposed automatic price adjustment of fuel oils, but criticised the budgetary provision of the facility to whiten black money.
They suggested adoption of a liberal trade policy, export diversification, reform in the power and transport infrastructure, and attracting more foreign direct investment to achieve the projected GDP growth target of 7.2 per cent in the new fiscal year. If this is done it will not be impossible to achieve the growth targets.