ERD sets 7 mandatory conditions for faster execution of foreign projects
These mandatory conditions must be followed from the initial preparation phase to safeguard the time value of money and improve project execution
In a move to ensure timely progress and efficient spending in foreign-funded development projects, the Economic Relations Division (ERD) of the Ministry of Finance has issued a new circular introducing seven mandatory preconditions that ministries and divisions must fulfil before signing any loan agreement.
The circular, signed by Syed Ashrafuzzaman, wing chief of ERD's Foreign Aid Budget and Accounts (FABA) Wing, was issued on Monday.
The circular states that in order to maintain the time value of money and avoid unnecessary delays in projects implemented with foreign loan assistance, certain specific steps must be mandatorily followed in the early stages of project planning.
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The seven conditions that must be fulfilled before signing a loan agreement with a development partner for any project are as follows.
The first and second conditions are – the Development Project Proposal (DPP) and Technical Assistance Project Proforma (TAPP) must be prepared in line with the guidelines of the Planning Commission and receive approval from the appropriate authorities; and appointment of the project director and other necessary personnel must be completed before signing the agreement.
The third and fourth conditions are – land acquisition for the development project must be ensured in advance; and a resettlement plan for those affected by the land acquisition must be submitted to the relevant ministry.
The fifth condition requires preparing the cost estimation and draft bidding documents for civil works, goods, or services, and completing all procedures – from initiating the tender process to awarding the contract.
The next condition requires obtaining clearance from the Finance Division regarding the terms of the subsidiary loan agreement, where applicable, in line with the negotiated agreement between the development partner and ERD.
The final condition is to sign a time-bound memorandum of understanding between the relevant agencies and the implementing body regarding the transfer of project-related services.
The ERD stated that these conditions will apply not only to future projects but also to all ongoing and pipeline projects. Ministries, divisions, and their subordinate agencies will now be required to take a more proactive role in planning and preparing for foreign-financed projects from the outset.
The circular further stated that no loan agreement will be approved unless a project's structural and administrative preparations are fully completed.
