Revised ADP set for 11.83% YoY lower

The Planning Commission has given initial approval for a Tk216,000 crore allocation for the Revised Annual Development Programme (RADP) for the current fiscal year, marking an 11.83% year-on-year decrease. 

The revised plan will be presented for final approval at the National Executive Committee (NEC) meeting on 3 March, chaired by the chief adviser. Last fiscal year, the government spent Tk196,111 crore, or 80% of the RADP allocation of Tk245,000 crore.

According to stakeholders, the implementation situation has worsened this fiscal year due to the July uprising and its aftermath. As a result, government investment through ADP will decline, affecting the rural economy and employment. 

Zaid Bakht, former research director at the Bangladesh Institute of Development Studies, told The Business Standard that ministries and departments lack the capacity to utilise ADP allocations, and the current fiscal year's reality will further reduce expenditure, leading to higher unemployment and poverty. 

"However, this is not a structural issue and can be overcome by quickly implementing employment-creating projects, boosting both government investment and growth," he added.

Economist M Masrur Reaz said, based on the ADP implementation trend this fiscal year, government investment is unlikely to increase. 

"Reduced RADP allocations and expenditure will lead to lower government procurement, decreased development spending – particularly in rural areas and fewer employment opportunities," he said. Additionally, government revenue from development projects will also decline, he added.

Mustafa K Mujeri, executive director at the Institute for Inclusive Finance and Development, told TBS that instability since July has led to the lowest ADP implementation rate in over a decade, with no clear timeline for improvement. 

He explained that the government's allocation for ADP is limited due to revenue collection, the provision of dearness allowances, and spending on foreign loans, which has reduced foreign financing and development partner disbursements. 

Despite the reduced allocation, concerns remain about whether the Tk2 lakh crore can be fully spent, he added.

Planning Commission officials explained that ministries and departments typically submit higher allocation demands, which creates pressure during RADP distribution. However, demand was lower in the current fiscal year, likely due to the election year. 

This year, the demand was only Tk191,113 crore, prompting an increase in RADP size through a lump sum allocation of Tk26,000 crore to expedite the approval of new projects and increase expenditure. In previous years, revised ADP allocations were around Tk500-600 crore, they added.

The Planning Commission attributes the decrease in demand to contractors leaving many projects due to the July-August movement and the government change, requiring new tenders for contractor appointments. Additionally, many project directors have left, and although new ones have been appointed, they have yet to accelerate implementation. 

The rise in construction material prices and the value of the dollar has also hindered progress. As a result, ministries and departments have reduced their demands out of concern that funds won't be spent. The Implementation Monitoring and Evaluation Department reports that 20.77% of the total allocation has been spent in the first seven months of the current fiscal year, it added.

RADP allocation drops by Tk49,000 crore

The allocation to the RADP for the current fiscal year has decreased by Tk49,000 crore, or 18.49%, compared to the original ADP. Government fund allocation has dropped by Tk30,000 crore, or 18%, while foreign fund allocation has decreased by Tk19,000 crore, or 19%. 

As a result, the revised RADP allocates Tk135,000 crore to government funds and Tk81,000 crore to foreign funds. The original ADP for the current fiscal year was Tk265,000 crore, with Tk165,000 crore allocated to government funds and Tk100,000 crore to foreign assistance. 

Compared to the previous fiscal year's ADP, the RADP has decreased by Tk18,000 crore, or 6.84%, with a reduction of Tk7,500 crore, or 4.44%, in government funds and Tk10,500 crore, or 11.17%, in foreign assistance.

Allocation drops for transport, power, and energy, rises for education

In the current fiscal year's RADP, allocations for transport, power, and energy have decreased, while education has seen an increase. The transport and communication sector received the highest allocation of Tk48,253 crore, or 22.34% of ADP, but this is down from 28.87% in the last fiscal year's RADP. 

The power and energy sector saw a significant reduction, receiving only 14.77% compared to 34.24% in the previous fiscal year. However, allocations for education, housing and community facilities, local government and rural development, agriculture, health, science and technology, and industry and economic services have increased. 

The education sector, with an allocation of 9.42%, received the third-highest funding, up from 3.90% in the last RADP. The health sector's allocation decreased to 3.92%, from 4.18% last year. 

Housing and community facilities received 9.10%, local government and rural development 7.85%, agriculture 4.46%, industry and economic services 2.06%, and science and technology 2%.