Planning Commission nods to trimmed-down Tk2.3 lakh crore ADP for FY26

Infographics: TBS

In line with the interim government's austerity drive and cuts to low-priority projects, the Planning Commission has granted initial approval to a Tk230,000 crore Annual Development Programme (ADP) for the upcoming fiscal year (FY26) – a significant reduction from the current fiscal year's original ADP.

The proposed ADP marks a 13.20% or Tk35,000 crore reduction from the original ADP of the current fiscal year, but a 6.48% or Tk14,000 crore increase compared to the revised ADP.

The approval came during a meeting held on Tuesday (6 May) at the NEC conference room in Sher-e-Bangla Nagar, chaired by Planning Adviser Wahiduddin Mahmud.

The final endorsement is expected later this month from the Executive Committee of the National Economic Council (Ecnec), led by Chief Adviser Muhammad Yunus.

According to Planning Commission officials, sectoral allocations may undergo minor adjustments before the final approval. 

Officials said that, unlike previous years, the new ADP is smaller as the interim government stuck to its austerity policy and the exclusion of low-priority projects inherited from the previous government.

They said many development projects were disrupted after the fall of the Awami League government in August last year, as project directors and contractors left. Though work has resumed through alternative arrangements, the situation remains unstable, leading to lower demands from ministries and divisions.

M Masrur Reaz, chairman & CEO of Policy Exchange Bangladesh, told TBS that the proposed ADP being 13% lower than the current fiscal year's original ADP — and only 6% higher than the revised ADP — is a positive move. 

"A larger ADP could worsen inflation. This approach helps keep domestic demand reasonable and avoids conflict between fiscal policy and the government's contractionary monetary stance. It will also support stability in the balance of payments," he said.

He further added that the foreign loan component in the new ADP has also been reduced compared to the current fiscal year, which is a good sign, as the country's external debt has increased in recent years, affecting debt discipline and raising repayment pressure. The lower reliance on foreign loans will aid in better debt management and improve debt sustainability.

Govt, foreign funding reduced

According to Planning Commission sources, the government's allocation for the upcoming fiscal year's ADP is Tk1,44,000 crore, a 12.72% decrease from the current fiscal year. However, compared to the revised ADP for the current year, the allocation has increased by 6.66%.

Foreign aid for the upcoming ADP has been cut by Tk14,000 crore to Tk86,000 crore, compared to the current year's ADP, but it has risen by Tk5,000 crore from the revised ADP.

Five sectors get 70% allocation

According to Planning Commission officials, as in previous years, the proposed ADP allocates the highest share, up to 70%, to five sectors out of the 15 sectors. These sectors are - Transport and Communications, Power and Energy, Education, Housing and Community Facilities, and Health.

The highest allocation in the new ADP, Tk58,973.4 crore, has been given to the Transport and Communications sector, which accounts for 25.64% of the total ADP. The Power and Energy sector has received Tk32,392.26 crore, representing 14% of the ADP allocation.

The Education sector has been allocated the third-highest amount, Tk28,557.43 crore (12.4%). The Housing and Community Facilities sector has received Tk22,776 crore, while the Health sector has been allocated Tk18,148 crore.

Masrur Reaz said allocating the highest funding to Transport, Communications, Power, and Energy is logical, given the need for infrastructure development as Bangladesh graduates from LDC status. However, timely and budget-compliant project implementation is essential. Additionally, more priority should be given to the Health and Education sectors.