Tk2,63,000cr ADP approved with highest allocation for transport

Infographic: TBS

Bangladesh's development budget faces a persistent issue of inefficiency in utilising foreign funds allocated for projects. This trend has continued in recent years, and the upcoming budget follows suit.

Of the Tk263,000 crore budget for the Annual Development Programme (ADP) for upcoming fiscal year 2023-24, Tk94,000 crore or 35.74% will come from foreign sources as project loans, according to the planning commission.

The ADP of FY24 is 6.88% higher compared to that of the outgoing year.

In the outgoing fiscal year, the government reduced the contribution of project loans from the initial proposal of Tk93,000 crore to Tk74,500 crore, accounting for 32.73% of the total outlay. In the previous year, foreign loans accounted for 33.83% of the total ADP budget.

Consequently, the country's foreign loans in pipeline have swelled to approximately $48 billion as of February this year, despite a depletion of foreign exchange reserves.

Planning Minister MA Mannan said that the prime minister has ordered to increase the flow of foreign loans and asked to undertake more foreign-funded projects. Simultaneously, efforts must be made to enhance implementation, he said.

The minister mentioned that development partners have certain conditions for providing loans. Recently, the prime minister visited the World Bank headquarters and demanded loans without conditions.

Secretary of the Planning Division Satyajit Karmaker said that ministries and departments that are unable to utilise foreign loans are under the prime minister's scrutiny. For example, the Ministry of Shipping, Ministry of Health Services, and Ministry of Primary and Mass Education have limited capacity to utilise foreign loans.

Economists said to address this concern, it is crucial to prioritise effective implementation and ensure that allocated funds are utilised optimally. By enhancing project management capabilities and streamlining processes, Bangladesh can maximise the impact of foreign loans while maintaining financial stability, they opined.

Dr Mustafa K Mujeri, former director general of Bangladesh Institute of Development Studies (BIDS), said that Implementation of foreign-funded projects tends to be more complex compared to those funded by the government.

"As a result, development partners usually have strict criteria for foreign loan projects. These criteria are used to determine when funds should be released during the implementation phase," he said.

He further said that development partners have their own implementation procedures and procurement guidelines that must be followed by project officials. "However, there is often a lack of capacity in this area, making it difficult to comply with these guidelines."

"Furthermore, the target for foreign debt utilization in the Annual Development Programme (ADP) each year is often unrealistic for many projects, leading to budget cuts during the implementation phase," he said.

The National Economic Council (NEC) approved the revised ADP at a meeting presided over by NEC Chairperson and Prime Minister Sheikh Hasina at the NEC conference room in Dhaka Thursday.

Planning Minister MA Mannan, Dr Shamsul Alam, state minister for planning, and Satyajit Karmaker, member of the Programming Division at the Planning Commission, presented the details of the revised ADP at a press briefing after the meeting.

The government will provide around Tk169,000 (64.25%) from its own fund, the same as the original ADP allocation. Around Tk94,000 crore (35.74%) will be collected from the external sources.

Additionally, autonomous bodies will spend another Tk 11,674 crore for their projects.

Number of projects

The Annual Development Programme for the 2023-2024 FY comprises a total of 1,309 projects, including 1,118 investment projects, 22 survey projects, 80 technical assistance projects, and 89 projects under implementation by autonomous institutions/corporations.
Unauthorised projects

Some 1,227 projects have been carried over from the ADP of the 2022-23 FY to the next fiscal year. Moreover, 1,078 projects have been listed as unauthorised projects without allocation in the ADP for the 2023-24 FY.

Meanwhile, 536 projects that will expire in June 2023 have been added to the ADP in the next financial year.

Abandoned project

In the ADP for the current financial year, 337 projects were determined to be completed by June 2023. However, there are 23 projects that will not be completed by the deadline and have been included in the next ADP.

Additionally, three unfinished projects from the Ministry of Labour and Employment, Ministry of Environment, Forest and Climate Change, and Ministry of Social Welfare were not included in the revised ADP for the 2021-22 fiscal year.

Lump sum allocation

In the new ADP, Tk11,397.38 crore has been allocated for ministry and department wise "lump sum" allocation, which is 4.33% of the total ADP.

10 ministries and departments with highest allocations

The Local Government Division has received the highest allocation among the ministries and departments in the next financial year with about Tk40,503 crore, which is 15.40% of the ADP.

The second highest allocation of Tk34,062 crore, which is 12.95% of the ADP, has been allocated to the Road Transport and Highways Division.

Other departments and ministries that have been allocated a significant amount of funds include the Power Division with Tk33,775 crore, Ministry of Railways with Tk14,960 crore, Directorate of Secondary & Higher Education with Tk14,086 crore, Ministry of Science and Technology with Tk12,980 crore, Health Services Division with Tk12,209 crore, Ministry of Primary and Mass Education with Tk12,018 crore, Ministry of Shipping with Tk9,474 crore, and Bridges Division with Tk9,064 crore.

A total of Tk193,132 crore have been allocated among these 10 ministries and departments, which is about 73.43% of the total ADP.

10 projects with highest allocations

The Rooppur Nuclear Power Plant construction project has been granted the highest allocation of Tk9,707 crore in the upcoming financial year.

The other projects that have received a high allocation in the upcoming financial year include the Matarbari Coal Fired Power Project with Tk9,081 crore, the Fourth Primary Education Development Programme (PEDP-4) with Tk8,586 crore, the Dhaka-Ashulia Elevated Expressway (1st Revised) project with Tk5,870 crore, the Padma Bridge Rail Link (1st Revised) with approximately Tk5,500 crore, and the Hazrat Shahjalal International Airport Expansion (1st Phase) (1st Revised) with Tk5,499 crore.

Furthermore, the Physical Facilities Development project (1st Revised) has been granted Tk4,696 crore, the Dhaka Mass Rapid Transit Development Project (Line-1) has received Tk3,911 crore, the Bangabandhu Sheikh Mujib Railway Bridge project has been allocated around Tk3,778 crore, and the Dhaka Mass Rapid Transit Development Project (Line-6) (2nd Revised) has been allocated Tk3,425 crore.

Climate trust fund projects

According to the decision of the NEC meeting, the climate trust fund projects will be reflected as investment projects from the ADP of the next fiscal year.

Project loan instead of project aid

Our various development projects are funded by development partners through loans. Previously, these loans were classified as "foreign aid," but it has now been decided to refer to them as "project loans".

ADP implementation rate in FY23

From July to April of the current financial year, the ministries and divisions have spent 50.33% of the total revised Annual Development Programme (ADP), which is lower than the spending rate of 54.57% during the same period in the previous fiscal year. The ADP implementation rate for the previous two years was 49.09% and 49.13%, respectively.