ADP spending drop deepest in 11yrs

ADP spending drop deepest in 11yrs
Development spending features marked it has the highest drop in total terms for the very first time in 11 years largely as a result of federal government pulling the brakes on implementation of low concern projects.

Behind the scenes, the intent is definitely to comprise expenditure in tune with sluggish earnings technology for the Covid-19-induced economical downturn.

The expenditure in the earliest half of fiscal 2020-21 declined 10 per cent year-on-year to Tk 51,266 crore from Tk 57,196 crore in the same period a year ago, reads data from the Implementation Monitoring and Evaluation Division.

Spending had dropped significantly less than 1 % in absolute terms in the July-December amount of fiscal 2015-16.

The latest data implies that a fall in expenditure under government-funded projects was among the reasons for the drop in overall spending for schemes beneath the Annual Development Program (ADP).

"If the decline is a good reflection of restrained funding of low priority projects, it really is in fact good news," said Zahid Hussain, past lead economist of Environment Bank Bangladesh.

"This may indeed have happened as indicated by the significant decline in fund release for federal government funded jobs," he said.

He said immediately after the fiscal time '21 budget, the government initiated a prioritisation training under which each ministry was asked to categorise their projects into high, medium and low concern.

The target was to restrain fund release for the low priority projects in order to keep the budget deficit within target, given the tighter earnings situation, added Hussain.

"We hope the results from the effort to clamp down on wasteful development expenditure will stay for the rest of the year and not become mere postponement of the same expenditures from the first ever to the next half of the entire year," he said.

"At the same time, the government should ensure unabated improvement in the implementation of large priority, top quality projects," he added.

The IMED info showed that the expenditure in December 2020 dropped 19 % year-on-year to Tk 12,793 crore.

The government has reserve Tk 214,611 crore to carry out development activities in 2020-21. 

Towfiqul Islam Khan,senior research fellow of the Center for Insurance policy Dialogue (CPD), said the ADP planned didn't consider the impact of Covid-19 and constrained fiscal space.

"So, this implementation position is against an inflated focus on. Hence, the total ADP expenditure through the first one half of the fiscal time is not very unexpected," he said.

He said the federal government was right to put constraints on ADP related expenditures immediately after the price range was passed. It was critical for the ADP to become revised and because it was not completed at that time, it ought to be done promptly, he said.

Khan said fiscal space would continue being constrained.

"Overall ADP expenditure is likely to be subdued through the remaining year. It's important that implementation of essential projects which are nearer to be completed is more carefully monitored," he added.

From policy point of view, the government must give attention to ensuring great governance and efficient make use of public funds. Immediate steps must stop corruption and wastage of general public money, Khan added.

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