ADP spending in first quarter lowest in 15 years

Amid cautious spending by the interim government and disruptions due to political turmoil, the implementation rate of the annual development programme (ADP) in the current fiscal year's first quarter hit the lowest in at least 15 years.

The government spent Tk 13,215 crore, or 4.75 percent of its ADP allocation, in the July-September period of fiscal year 2024-25, according to data from the Implementation Monitoring and Evaluation Division (IMED).

During the same period last fiscal, development spending amounted to Tk 20,609 crore, representing an implementation rate of 7.5 percent.

Surprisingly, the implementation rate stood at over 8 percent in the same period even amidst the pandemic in FY20.

Planning commission officials attributed the slow pace to the fact that many projects under the ADP were halted after foreign contractors left the country following the ouster of the Sheikh Hasina-led Awami League government on August 5.

Besides, the interim government is now moving slowly to review the significance of existing projects.

"The lack of resources and disruption in activities due to political unrest in the July-August period slowed the overall implementation rate," said Muntaseer Kamal, a research fellow at the Centre for Policy Dialogue.

In the past quarter, the country witnessed a massive reshuffle in its administration and office bearers, which likely impacted the overall implementation rate, he said.

Besides, many local contractors with political backgrounds are now absconding, he added.

Echoing those sentiments, KAS Murshid, former director general of the Bangladesh Institute of Development Studies, said the rate may improve once the situation stabilises.

"But we have to focus on the root causes since we see the same problem of low implementation rates every year," he said.

He also outlined other reasons why public projects are delayed, including the drawn-out process of appointing project directors.

"We often face trouble when executing projects due to poor feasibility studies. Many projects that were taken were politically motivated and driven by individual politicians," he said.

"If we don't escape this situation, we cannot speed up ADP implementation and get returns on time," he said.

The planning ministry recently formed a 12-member task force led by KAS Murshid to develop strategies to give a boost to the economy and mobilise resources for equitable and sustainable development.

"We [the task force] will sit with the IMED soon to discuss this matter. We need to explore the actual problems," he said.

However, Murshid also opined that the implementation rate does not properly reflect the real situation.

"Rather, we must see the types of projects. Sometimes, many 'insignificant' projects progress faster, which speeds up the overall execution rate," he said.

About the overall impact on the economy, Kamal said, "There are many construction firms, manufacturing companies, and workers involved with project implementation."

"So, the slower implementation has an impact on the overall employment generation as well as the calculation of the gross domestic products," he said.

However, Murshid said a lower implementation rate would not have any immediate impact on the economy.

However, he warned that government borrowing from banks to finance the projects may instead have a crowding-out effect, further straining credit flow to private enterprises.

"There is a credit issue. How will we finance the projects?" he asked.

A top official of the planning commission yesterday told The Daily Star, "We are working to prioritise project preferences. But the line ministry will take the final decision on which project will continue."