ADP spending rebounds

Development spending in Bangladesh rebounded in the last fiscal year although the implementation rate was still one of the lowest in three decades because of the disruption caused by the coronavirus pandemic and structural weaknesses.

The pace of execution of the annual development programme (ADP) sank to a 27-year low of 80.18 per cent in the fiscal year of 2019-20 as projects halted for two months in April and May last year after the government was compelled to enforce a countrywide shutdown to curb the rising cases of infections.

It bounced back to 82.21 per cent in the last fiscal year of 2020-21 after the government spent Tk 172,051 crore out of the Tk 209,272 crore set aside for the ADP projects, shows data from the Implementation Monitoring & Evaluation Division (IMED) of the planning ministry.

It is nowhere near the average implementation rate of 90 per cent in the pre-pandemic level and was, in fact, the third-lowest since FY1993-94, according to the Bangladesh Economic Review.

The development spending stood at Tk 49,920 crore in June, up 7.77 per cent from Tk 46,319 crore in the same month a year ago.

In FY21, the government expended Tk 111,981 crore from its coffer, which is 83.17 per cent of the allocation. The expenditure, however, went past the pre-pandemic level of Tk 111,165 crore.

It used up Tk 52,462 crore from the development assistance, which accounted for 83.27 per cent of the target.

Zahid Hussain, a former lead economist of the World Bank’s Dhaka office, said, “Something never changes in our budgetary management. ADP implementation is surely one of them.”

“It has not kept pace with the increase in the size and number of projects. Despite the implementation shortfall, we do not see change in these aspects.”

The root causes of the problem are well-known. The major ones include project management inefficiencies, procrastination in decision-making, corruption, and the absence of accountability, he said.

“Public financial management reforms have so far failed to mitigate the implementation deficiencies despite efforts spanning more than three decades.”

Some 1,946 projects received allocations in the last fiscal year, IMED data showed.

The energy and mineral resources division was the top performer as it expended 104.27 per cent of the revised allocation. The power division’s implementation rate stood at 89.71 per cent.

Nasrul Hamid, state minister for power and energy, said many projects came to a halt at the beginning of the pandemic. Many foreign consultants and workers went back to their countries.

“The officials of the whole ministry took risks. And they worked as a team to pull off this success,” he said.

The science and technology ministry came second riding on the faster implementation of the Rooppur Nuclear Power Plant, with an execution rate of 101.29 per cent.

Despite being one of the priority sectors of the government owing to the ongoing pandemic, the health services division emerged as one of the worst performers. It spent 57.91 per cent of the budget for FY21.

Similarly, the food ministry’s expenses were 55.71 per cent. The social welfare ministry spent 70.16 per cent of the allocation.

Hussain said it was unfortunate that projects undertaken to address the public health emergency suffered from the same business as usual problems as any other project.

“Their speed and quality of implementation do not reflect any sense of urgency and dedication to addressing the health distress caused by the pandemic.”

The agriculture ministry’s ADP implementation rate stood at 97.52 per cent, the disaster management and relief ministry 89.04 per cent, the fisheries and livestock ministry 88.77 per cent, and the road transport and highways division 87.98 per cent.

The local government division, which received the highest allocation from the development budget, attained 81.44 per cent of the spending goal.

The ADP implementation rate of the railways ministry stood at 84.97 per cent as it moved fast to complete the Padma Rail Link project.

Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said the lower implementation reflected the weakness of the allocation structure of the budget as it was assumed that the projects that received the higher allocation would face difficulty in their implementation.

In a welcoming move, the government has prioritised projects to free up funds for those that would help the country tackle the impacts of the pandemic.

“The move was right. But I don’t think the plan had worked as expected,” Moazzem said.

The implementation of the aid-backed large projects slowed as many foreign consultants, experts and workers delayed to return to Bangladesh because of the pandemic.

Moazzem called for holding project directors accountable for the lower implementation.

“The accountability of the project directors has to be ensured as projects often face time and cost overruns. Project directors have to be held responsible for the corruption and wastage as well.”

The government has set aside Tk 225,324 crore for the ADP in FY22.

Moving forward, the authorities need to focus rigorously on holding the implementation agencies accountable for delivering what they promise to deliver in their annual performance agreements, according to Hussain.

“Intensive, dispassionate and independent monitoring and evaluation of projects is a technical solution that will yield results only if it is backed by the political will to make sure we get the value of money spent on the ADP.”