Govt plans to ramp up dev spending to avert economic slowdown

The interim government plans to ramp up development budget spending and initiate new projects to accelerate public investment, with the goal of reducing the risk of an economic slowdown.

"Private sector investment is also not picking up. On the other hand, if government investment does not increase, an economic slowdown will occur," said Planning Adviser Wahiduddin Mahmud.

Briefing journalists after the Executive Committee of the National Economic Council (Ecnec) meeting yesterday, he said private investment is stagnating due to various uncertainties, making it increasingly difficult to maintain production in the private sector.

"Demonstrations are taking place across various sectors, including ready-made garments, and as a result, entrepreneurs are reluctant to invest," he said. "Additionally, the significant increase in interest rates has further discouraged investment from the private sector."

In response to a question, he said even with zero investment in a year, significant growth is still possible if the production environment is favourable. The informal sector, service sector, small businesses, and trade do not require large investments.

"When conditions improve, demand increases, money flow expands, and business activity grows. While investment is crucial for economic growth, it is not always the determining factor," he added.

The planning adviser said since taking office, the government has prioritised corruption-free implementation of ongoing projects, now shifting focus to their speedy execution.

He said new directors have already been appointed to the projects to accelerate Annual Development Programme (ADP) implementation and address delays in the current fiscal year.

After the Ecnec meeting, chaired by Chief Adviser Muhammad Yunus, Wahiduddin said while trying to prevent misuse and corruption and drop unnecessary projects, the implementation of development projects is very slow.

Within the next two to three days, the planning commission will send a letter to all ministries for the speedy implementation of projects. At the same time, the planning adviser will also send a letter to all advisers to pay attention to development projects.

He said the ADP will be reduced significantly due to its slow implementation rate of 7.90% in the first four months of this fiscal year. The adviser explained that many proposed new projects were dropped, as some were politically motivated, while others did not appear cost-effective.

Many PDs could not be found after govt changeover 

"Many project directors resigned after the government change, and in some cases, directors could not be found. The directors left due to significant corruption," he said.

For instance, the director of the Matarbari Coal Power Project could not be located. Additionally, during the transition, the directors sold off many government assets. This has occurred in several projects, leading to the appointment of new project directors.

He further said many ongoing projects are now being revised. For foreign-funded projects, revisions are being made in consultation with development partners.

Wahiduddin said the ministries have not yet stabilised, which is why new projects have not been initiated. Under the previous political government, many new projects were added, significantly increasing the total number of projects.

However, under the current government, the number of projects is declining, as each new project is carefully evaluated for its potential benefits and innovation.

Some foreign-funded projects for which preparatory work had already begun were easily approved as new projects.

The planning adviser said the advantage of a political government is its ability to initiate many new projects, such as building roads and schools, through elected representatives. In fact, more projects are typically undertaken during such a government.

However, the current interim government does not have an elected parliamentary constituency, and the time is limited, which is why new projects have not been launched. This is why everyone, including the chief adviser, has emphasised that some new projects will be undertaken.

He said innovative projects, human resource development for education, road and school construction, and other necessary infrastructure projects will be prioritized. The advisory council will meet soon to decide which new projects can be implemented in the shortest possible time.

The adviser said the entire economy is facing stagnation, with inflation driving up the prices of daily necessities far beyond people's purchasing power.

"If economic activities are not expanded, there will be no job creation, and wages will not rise. While inflation stands at 10-11%, agricultural wages are only increasing by 8-9%, yet the poor and lower-income groups are not benefiting from this," he added.

He said if there is stability in the economy, private entrepreneurs will be more likely to invest. Dynamic development projects would also help accelerate economic activities. Much will depend on the country's political situation; if political stability is not restored, project implementation will be affected.

Wahiduddin said the allocation for the education sector will be higher than in previous years, but this allocation is not for building new infrastructure. It will be used for purchasing educational and research equipment. Similarly, the government will prioritise allocation for the health sector.

Ecnec approved five projects at a cost of Tk5,916 crore. The approved projects include Expansion and Capacity Building of the Eastern Grid Network, Capacity Building of Universities in Bangladesh to Promote Youth Entrepreneurship and Modern Waste and Spilled Oil Removal Management at Mongla Port.

Ecnec is also considering the External Telecommunication Network Installation Project for the Rooppur Nuclear Power Plant. Although it was presented at the meeting, approval was not granted.

In this regard, the planning adviser said there is considerable controversy surrounding the Rooppur project. He said the technology used in this project cannot be considered the best, but now that the project has become a reality, it cannot be discarded.