Austerity hits July’s ADP spending

The government's austerity measures have hit implementation of the annual development programme (ADP) in the first month of the current fiscal year, with just 0.96 per cent of the total allocation being spent, the lowest in the last four years. 

This means ministries and divisions spent Tk 2,455 crore out of the total allocation of Tk 256,003 crore, according to data of the Implementation Monitoring and Evaluation Division (IMED) under the planning ministry.

In contrast, the rate was 1.14 per cent in July of fiscal year 2021-22 when the total allocation amounted to Tk 236,793 crore.

The last time the rate was lower than that of this fiscal year was in fiscal year 2018-19 when the rate was 0.57 per cent and the total allocation amounted to Tk 180,869 crore.

Sources said this slow implementation over four years back was due to it being an election year.

In the initial couple of months of a fiscal year, the implementation rate usually remains low according to past trends.

Moreover, this year saw the emergence of the Russia-Ukraine war for which the Finance Division issued a circular on austerity measures on the first day of the month of July, according to a planning ministry official.

The stance comes in the face of strained foreign currency reserves, higher global and domestic inflation, low fiscal space and ongoing concerns over the war.

As a part of the austerity measures, the ADP have been categories based on their importance as A, B and C.

A category projects will continue running as usual while up to 75 per cent of allocations for B category projects can be spent.

All C category projects have been put on hold but the ministries and divisions can re-route these allocations to A category ones.

While the notice has not articulated what constitutes an A category project or a C category project, The Daily Star has learnt from finance ministry officials that projects that would increase economic activities have been given the highest priority.

"About Tk 30,000-Tk 40,000 crore can be conserved in this way," said a finance ministry official, adding that import components of government-funded projects have been suspended.

In the amount spent in July of this fiscal year, there was more foreign assistance than government funds.

According to IMED statistics, in the current fiscal year, Tk 1,322 crore of government funds were spent, which is 0.89 per cent of the total government fund allocated for the year.

In contrast, use of foreign assistant stood at 1.06 per cent from Tk 92,020 crore.

Meanwhile, 15 ministries and divisions got 82.67 per cent of the total ADP allocations.

Of them, agriculture, water resource and primary and mass education ministries failed to spend any penny in the first month of the current fiscal year.

The shipping ministry and housing and public works have spent just 0.04 per cent of their allocation while the Prime Minister's Office spent 0.06 per cent.

However, the top performer was the local government division, spending 2.81 per cent, while the second position holder the power division (1.91 per cent).