Development budget set for major shrink as govt to cut ‘politically motivated’ projects

The development budget for 2024-25 fiscal year, approved by the previous government, is likely to witness a major shrink as the interim government has decided to scale back many of those labeling them 'politically motivated'.

The interim government that came to power on 8 August following the student-led mass uprising has decided to cut short these 'unessential' projects, aiming to prevent wastage of public money.

According to the planning ministry sources, the Executive Committee of the National Economic Council (ECNEC) concluded in its meetings that several projects initiated by the Awami League government had not delivered satisfactory results relative to their costs.

"The development budget would be smaller comparing to the previous years," Planning Adviser Dr Wahiduddin Mahmud recently told in a media briefing after an ECNEC meeting.

The first four months of the current fiscal year have seen an exceptionally low 8% implementation rate of the development budget, which also applies to foreign-funded projects.

The Planning Commission data shows that the rate stands at 12-13% for government entities using their own funds to implement projects.

The pace of government development programmes has remained sluggish, with the Annual Development Programme (ADP) recording one of its lowest execution rates in the last five years.

During the first four months of the current fiscal year, from July to October, the ADP implementation rate stood at only around 8%, the lowest figure in recent years, according to the Implementation Monitoring and Evaluation Division (IMED) of the planning ministry.

Its data highlights that, in contrast, the same period last year saw an execution rate of 11.54%.

Specifically, for the period from July to October of the current fiscal year, the government managed to implement development projects worth Tk21,978 crore, according to the IMED.

Dr Yunus- led interim government in its first Ecnec meeting had decided to reduce the development budget.

Dr Wahiduddin Mahmud said many of the previous projects were politically motivated and unlikely to yield positive results in proportion to their costs.

"We did not believe these would bring any substantial results, so we have cut them. Typically, the revised development budget shrinks, but this time the reduction will be more significant," he said.

Planning ministry sources said the slow pace of project implementation is partly due to the fact that many project directors have fled.

This has created significant challenges for the government in continuing the projects.

Planning Commission sources said the interim government is putting emphasis on the innovative and new type of projects moving away from outdated and politically motivated ones.

The planning adviser has instructed relevant officials to carefully design projects ensuring they will deliver multiple positive outcomes relative to their costs, the sources said.

The National Economic Council (NEC) of the Awami League government approved the Annual Development Programme (ADP) for the fiscal year of 2024-2025 with an outlay of Tk265,000 crores.

The transport and communication sector got the highest allocation of Tk70, 687.75 crore (26.67% of allocation) in the ADP.

Besides, the NEC approved some Tk13,288.91-crore ADP of the autonomous bodies or corporations.

In the new ADP, the total number of projects is 1,321 including 1,133 investment projects, 21 survey projects, 87 technical assistance projects and 80 projects from the autonomous bodies and corporations.

With Tk13,288.91 crore ADP for autonomous bodies or corporations, the total size of ADP for 2024-2025 stood at Tk278,288.91 crore.