Development spending slows to 13-year low

Spending under the Annual Development Programme (ADP) has been going slow in the current fiscal year (FY), with implementing agencies having used just 22.48 percent of their allocations till December last year, official figures showed.

The government managed to spend just Tk 61,739 crore of its Tk 274,678 crore ADP budget in the first six months of FY24, which was its lowest execution rate in at least the past 13 years.

The current execution rate is even lower than that witnessed in FY21, when ADP spending slowed to 23.89 percent of the Tk 214,611 crore allocation, as per data of the Implementation Monitoring and Evaluation Division (IMED).

"The significantly low implementation rate is a bad sign for the economy," said Muntaseer Kamal, a research fellow of the Centre for Policy Dialogue.

Kamal attributed the recent general elections as a potential reason for the slow ADP implementation as administrative activities had become restricted at the time.

Apart from that, government revenue collection is expected to reduce this year, which may contribute to slower disbursals for project implementation.

The tax collector logged revenue of Tk 165,630 crore in the July-December period of FY24, missing its target by more than Tk 23,200 crore, according to provisional data of the National Board of Revenue.

Kamal welcomed the rising trend of the utilisation of foreign funds for various project. However, spending from foreign loans for local projects decreased slightly to 26.14 percent in the first six months of the current fiscal.

On the other hand, spending by state-run enterprises in the July-December period increased to Tk 2,742 crore, or 23.49 percent, of the Tk 11,674 crore allocated for FY24, the IMED data showed.

Meanwhile, Prime Minister Sheikh Hasina directed officials at the last planning commission meeting on January 24 to ensure feasibility studies for improving the quality of implementation.

To this end, she also gave direction to utilise foreign loans and grants, take effective projects for the people, and make an "experienced panel" for project directors.

Among the 15 highest recipients of ADP allocations, the shipping ministry was the worst-performing division in the July-December period.

The ministry's spending stood at Tk 917.11 crore, accounting for only 9.23 percent of its total allocation.

Other low performers include the secondary and higher education division, and the health services division. The bridges division was the top performer, spending 32.45 percent of its budget.

The railway ministry came second with its expenditure standing at 32.33 percent followed by the agriculture ministry with 32.03 percent.