Jul-Nov ADP spending lowest in over a decade

The implementation rate of the Annual Development Programme (ADP) in the first five months of the current fiscal year is only 12.29%, the lowest in over a decade. 

According to the Implementation Monitoring and Evaluation Division (IMED), ADP implementation typically ranged from 17% to 18% during the July-November period, with 17.06% in FY24 and 18.41% in the previous fiscal year. 

IMED data shows that spending in this period amounted to Tk34,214.55 crore, compared to Tk46,857.38 crore in the equivalent period of the previous fiscal year. 

The government's ADP allocation for the current fiscal year is Tk278,288.90 crore. 

IMED officials cited delays in the review of ongoing and newly proposed projects, along with a decrease in fund releases, as factors contributing to the slowdown in ADP implementation. Additionally, many contractors abandoned projects after the interim government assumed power in early August.

Following a 25 November meeting of the Executive Committee of the National Economic Council, Planning Adviser Wahiduddin Mahmud acknowledged the slow pace of project implementation. 

He noted that efforts are being made to prevent waste and corruption while cutting unnecessary projects. He also mentioned that many ongoing projects are being revised, especially foreign-funded ones, after discussions with development partners, and several ADP projects had been overvalued. 

The adviser added that many project directors resigned following the change of government, citing corruption, prompting new appointments for many projects.

IMED officials said the ADP implementation was also impacted by the July-August uprising, which led to the ouster of Sheikh Hasina's Awami League government on 5 August, causing instability that brought development activities to a standstill. 

The absence of contractors for many domestic and foreign projects further hampered implementation. The government has reduced fund releases, focusing only on key projects.

The government has decided to review both ongoing and proposed projects, leading to delays in proposals to extend the duration and cost of many projects. As a result, development spending has stalled. 

According to IMED, government funds spent between July and November amounted to Tk1,9411 crore, or 11.76% of the allocation, marking the lowest expenditure for this period in any fiscal year. In the same period last fiscal year, Tk27,291 crore, or 16.15%, was spent. 

Foreign loans and grants in the current fiscal year were spent at 11.41%, or Tk11,407 crore, during July-November, compared to Tk18,023 crore, or 19.08%, in the previous fiscal year. 

IMED data also shows that 30 ministries and departments spent less than 10% of their government fund allocations, including the Health Services Division, Ministry of Social Welfare, Road Transport and Highways Department, Ministry of Industries, and Ministry of Disaster Management and Relief. 

Furthermore, 22 ministries and departments spent less than 10% of their foreign aid allocation, including the Department of Local Government, Department of Bridges, Health Services Division, Shipping, Ministry of Science and Technology, and Ministry of Housing and Public Works.

According to IMED data, 15 ministries and divisions received 76.65% of the funds for the current fiscal year. Among them, the Health Services Division has spent only 2.91% of its allocation. 

Other ministries with less than 10% ADP implementation include the Bridges Division, Ministry of Health, Education and Welfare, and Ministry of Shipping. However, the Local Government Division, Power Division, and Ministry of Agriculture are leading in ADP implementation, with rates of 20.31%, 18.54%, and 16.54%, respectively. 

The Ministry of Railways has an implementation rate of 15.95% over the past five months.

Mustafa K Mujeri, executive director at the Institute for Inclusive Finance and Development, stated that the current government is reviewing ADP projects, as many politically motivated and unnecessary projects were initiated under the previous Awami League government. 

He pointed out that the government's low revenue collection and slow disbursement of funds to development partners, combined with stagnant government recruitment due to the low ADP implementation rate, are hindering progress.

Mujeri warned that low ADP implementation will slow economic activities, reduce private investment support, cut employment opportunities, and lower economic growth. 

He emphasised the need to accelerate ADP implementation to boost government investment and avoid economic decline.