Growth in ADP allocation lowest in nearly a decade

The Covid-19 pandemic is going to take a toll on Bangladesh's development activities for the next fiscal year, as the government has proposed just 1 percent higher outlay than the original allocation for the outgoing year.

Moreover, the focus of spending next year will be on health, agriculture and other related sectors that have been affected by the pandemic.

The government has proposed an allocation of Tk205,145 crore for the Annual Development Programme (ADP) for fiscal year 2020-21, which includes strategies for dealing with the coronavirus pandemic.

The proposed outlay for the next fiscal year is 1.18 percent higher than the ongoing year's original ADP size, and 5.96 percent higher than the revised budget.

The growth in allocation for next ADP is the lowest in nearly a decade. The allocation for fiscal year 2019-20 was 14.66 percent higher than a year ago. The outlay for fiscal 2017-18 was 29 percent higher than in 2016-17.

The Covid-19 pandemic has come as a blow to the government, which has been on a spending spree to improve the country's poor infrastructure. The size of the development budget rose 8 times in the last decade. 

On Monday, the Finance Division informed the Planning Commission about the proposed ADP allocation for the year 2020-21. The government will fund Tk134,643 crore of the total allocation.

The government plans to get Tk70,502 crore of the development budget from foreign assistance, according to officials at the Planning Commission. 

They noted that the government, in a bid to continue the trend of development that has been going on in the last few years, initially proposed an ADP allocation of Tk220,000 crore, at a meeting held at the Finance Division in the beginning of March. 

However, the ADP allocation has been reduced due to the onslaught of the Covid-19 pandemic and the general holiday declared by the government to tackle the situation.

Speaking to The Business Standard, Planning Secretary Nurul Amin said, "Keeping people alive has become a major focus. So, the proposed ADP contains strategies for dealing with the coronavirus pandemic.

"Under this strategy, projects focusing on health, agriculture and social safety net sectors will get the utmost priority in the proposed ADP. Allocations for less important projects will be reduced, and budgets for less important parts of various projects will be redirected towards the above mentioned sectors."

He further said, "The Finance Division has set a ceiling for the ADP. The proposed ADP will be tabled at the National Economic Council (NEC) meeting after a finalization of the allocation process. The NEC meeting is scheduled to be held by May 15 this year. 

Spelling out more details, Planning Commission officials said a number of new projects, aimed at strengthening the health, agriculture and social security sectors, will be approved soon in order to tackle the pandemic. 

Those projects will be implemented within a very short term. To allocate funds for ongoing and new projects of these sectors, work on some other projects might be deferred. 

The officials added that funds for foreign trips, domestic trips and remuneration and refreshment costs might be dropped from the proposed ADP. 

However, adequate funds will be allocated to various projects to keep the wheels of the economy turning and for maintaining employment opportunities. 

Recently, Prime Minister Sheikh Hasina announced that funds for the ADP will be redirected towards tackling the Covid-19 pandemic. In line with the prime minister's announcement,the government went for some changes in the fund disbursement process for this year's revised ADP.

The ADP allocation for the ongoing fiscal year was Tk202,721 crore, which was reduced in the revised ADP at Tk192,921 crore. The government's allocation of Tk130,921 crore in the original ADP did not drop in the revised one, because utilising government funds is much easier than foreign assistance.

The volume of foreign aid has dropped by Tk9,800 crore in the revised ADP due to slow project implementation.  Although the government had targeted using Tk71,800 crore foreign aid in the 2019-20 fiscal year, the amount has fallen to Tk62,000 crore in the revised ADP. 

Authorities concerned pointed out that getting funds will be challenging for the government due to the ongoing situation caused by the Covid-19 pandemic. It has already taken an initiative to collect unutilised funds from various state agencies.

They also think that the government should give more importance to the health and food security sectors in the ADP for the next fiscal year. The government has only utilised 37 percent of the ADP allocation in the first seven months of the ongoing year.