The development budget is falling, and the size has been lowered by 18%. The interim government is set to make significant cuts to the Annual Development Program (ADP) this time. A preliminary plan has been taken to reduce the allocation in the revised ADP (RADP) by Tk 49,000 crore. In the original ADP for the current 2024-25 fiscal year, the allocation was Tk 2,65,000 crore. Based on this, the ADP size is expected to shrink by more than 18%. A review of past years’ budgets shows that the allocation was usually reduced by 5-10% from the original ADP. However, this time, the reduction rate is significantly higher.
The development budget: Officials from the Planning Ministry cited several reasons for this reduction. The nationwide development projects came to a halt following the July protests and their aftermath. After assuming office, the interim government reevaluated several ongoing projects and canceled many politically influenced projects. As a result, development expenditures have decreased. Additionally, since the fall of the Awami League government, the interim administration has been carefully scrutinizing project approvals, especially overestimated projects and those with political motives. This approach has led to a reduction in development spending.
According to sources from the Planning Ministry, the ADP is being revised earlier than usual this time. Typically, it is adjusted in March or April, but this year, the National Economic Council (NEC) is expected to finalize the revision in February. The core ADP allocation, excluding autonomous institutions, was originally set at Tk 2,65,000 crore. Of this, Tk 1,65,000 crore was planned from government funds, while Tk 1,00,000 crore was expected from foreign loans. In the revised ADP, the total allocation is likely to be Tk 2,16,000 crore, cutting Tk 49,000 crore. The new allocation will include Tk 1,35,000 crore from government funds and Tk 81,000 crore from foreign loans. Meetings are already being held with relevant ministries to discuss the revised ADP allocations. Due to the slow implementation pace, the demand for government funds has also significantly declined. In previous fiscal years, various ministries and divisions had high demand for government funds, but this year, their requirements are lower than the set ceiling in the ADP.
Regarding the ADP revision, Planning Advisor Dr. Wahiduddin Mahmud recently stated after an ECNEC meeting, “Greater emphasis will be placed on human resource development rather than infrastructure. More focus will be given to utilizing foreign funds rather than domestic financing. The development budget is usually revised in March, but we are trying to bring it forward. Our goal is to increase employment and benefit the people.”
According to Planning Ministry sources, in the 2023-24 fiscal year, the total ADP allocation was Tk 2,74,674 crore. In the revised ADP, Tk 20,282 crore was cut, bringing the final allocation down to Tk 2,54,392 crore. In the 2022-23 fiscal year, the original ADP allocation was Tk 2,56,003 crore, later revised down by Tk 19,442 crore to Tk 2,36,561 crore. Similarly, in 2021-22, the original allocation was Tk 2,36,793 crore, but after a cut of Tk 17,190 crore, the revised allocation was Tk 2,10,603 crore. In 2020-21, the ADP was initially set at Tk 2,14,611 crore, with a reduction of Tk 5,339 crore in the revised budget, bringing it to Tk 2,09,272 crore.
Current ADP Implementation Status:
According to the Implementation, Monitoring, and Evaluation Division (IMED), the ADP implementation rate for the first seven months of the current fiscal year is at its lowest level in a decade. From July to January, a total of Tk 59,876 crore has been spent from the ADP, resulting in an implementation rate of 21.52%. In the same period of the previous fiscal year (2023-24), the rate was 27.11%. A review of ADP implementation from 2011-12 to the present shows that this is the lowest rate recorded. Even during the COVID-19 pandemic, the implementation rate was higher.
The government allocated 76.65% of this fiscal year’s ADP to 15 ministries and divisions. As a result, overall ADP progress largely depends on their activities. However, some key ministries and divisions have shown very low implementation rates. The Health Services Division has implemented only 5%, the Health Education and Family Welfare Division 9.66%, the Ministry of Shipping 11.84%, the Secondary and Higher Education Division 16%, and the Ministry of Civil Aviation and Tourism 18.14%. Additionally, the Ministry of Railways has implemented 19.91%.
On the other hand, some ministries have performed relatively better. The Ministry of Science and Technology has implemented 36.55%, and the Power Division 33.64%.
Conversely, some ministries have shown extremely poor implementation rates. The Ministry of Foreign Affairs has implemented only 0.33%, the Internal Resources Division 1.90%, the Ministry of Land 5.31%, the Ministry of Social Welfare 6%, the Ministry of Commerce 7%, the Ministry of Chittagong Hill Tracts Affairs 7.41%, and the Ministry of Liberation War Affairs 9%, all of which are significantly below the average ADP progress rate.
