Govt brings down ADP for a lack of fund

The government is currently faced with a lack of funds, evidenced by a reduction in allocations it provided from the exchequer for the upcoming Annual Development Programme (ADP), said Fahmida Khatun, executive director of the Centre for Policy Dialogue.

"Due to a shortage of its own resources, the government is facing financial stress," she told The Daily Star in a short interview yesterday.

The government on May 16 approved Tk 2.65 lakh crore for the ADP for fiscal year 2024-25.

A total of Tk 1.65 lakh crore is coming from the government's own pockets, down from Tk 1.69 lakh crore provided in the ADP of the ongoing fiscal year.

Meanwhile, the allocation of foreign funds has increased by 6.38 percent or Tk 6,000 crore to a record Tk 100,000 crore at a time when the country is under pressure due to the bleeding of reserves.

According to Fahmida, the education and health sectors had to bear the allocation cuts.

To make do, the government is taking a huge amount of loans from the banking system against the backdrop of insufficient revenue mobilisation by the National Board of Revenue, she said.

That is why the government will depend of foreign aid for the development budget and probably try to also mobilise foreign funds for budgetary support as it is easy to utilise for any purpose, she said.

Though it is a necessary move, it remains to be seen whether the foreign funds can finally be mobilised for the ADP, said Fahmida.

Historically, foreign funds have not been implemented in a timely manner due to a lack of capacity of the ministries, she added.

Fahmida cited the example of the health ministry, saying that it could not fulfil its commitment and implement its allocation amounting to less than 1 percent of the GDP.

According to the monthly ADP implementation report of the Implementation Monitoring and Evaluation Division, the government managed to implement only 52.77 percent of the Tk 83,500 crore allocated from foreign aid during the July-March period of the current fiscal year.

The government could implement 90.40 percent in fiscal 2022-23, 92.66 percent in fiscal 2021-22, and 83.36 percent in fiscal 2020-21.

A lack of capacity and low interest in implementing the foreign aid due to strict monitoring by development partners were the main reasons for the low implementation, Fahmida said.