ADP to see Tk 75bn cut in PA allocation

The Economic Relations Division (ERD) has proposed the Planning Commission for a Tk 630 billion project assistance (PA) outlay for FY21’s revised ADP, down from Tk 705.02 billion original allocations, sources said.

“The allocation is being downsized in line with the demand placed by ministries or divisions. Original project assistance allocation remains high driven by high hopes, but is cut later when the agencies face the reality,” said Mostafizur Rahman, an ERD high official dealing with the matter.He said the cut in PA’s share in RADP is going to be lower this year compared to that in the last fiscal year marred by the Covid-19 pandemic.

In FY2020, project aid allocation saw a drastic cut by 13.65 per cent or Tk 98 billion from Tk 718 billion original allocations. Last fiscal year saw a serious twist in economic activities during corona lockdown in April and May.

“So, it can be said that negative impacts of corona have nothing to do with this cut as the curtailed amount is less than the amount slashed last fiscal year,” Rahman added.

While most sectors are losing foreign funds, allocation for the health sector is going up in RADP because of Covid-19 health emergencies. Science and ICT sector will lose the most amount of PA.

Original allocation for health, nutrition, population and family welfare sector was Tk 43.21 billion which has been proposed to be raised by Tk 35.36 billion to Tk 78.57 billion in the upcoming RADP.

On the other hand, science and ICT sector’s PA allocation is being slashed by Tk 50.40 billion to Tk 80.81 billion from as high as Tk 131.21 original ADP allocation.ERD’s proposal also suggests that agriculture sector’s revised PA allocation will be Tk 25.82 billion from Tk 29.38 billion, while that of rural development sector will stand at Tk 34.82 billion from Tk 36.69 billion, power sector from Tk 115.97 billion to Tk 111.35 billion and water resources sector from 4.16 billion to Tk 6.76 billion.

The transport sector is fetching revised allocation of Tk 183.37 billion instead of 196.32 billion, Oil, gas and natural resources sector getting Tk 8.54 billion in place of Tk 7.63 billion.

New allocation for communications sector will be lowered to Tk 8.11 billion from Tk 10.34 billion, physical planning and water supply sector Tk 45.62 billion from Tk 65.05 billion, education and religion sector Tk 18.90 billion from Tk22.65 billion, public administration sector Tk 12.38 billion from Tk14.94 billion.The government had announced a Tk 2,146.11 billion ADP for the current fiscal year, including Tk 94.66 billion development budget of public corporations. Of which 75.02 billion was expected to come from foreign sources.

During the July-December period, implementing agencies managed to spend a marginally higher amount of Tk 175.63 billion or 24.91 per cent out of total PA allocation. A year earlier, it was Tk 175.26 billion or 24.41 per cent.

Even after a drastic cut of Tk 98 billion in PA’s share last fiscal year, final spending from this segment stood at only Tk 475.35 billion or 76.67 per cent of the Tk 620 billion revised allocation.

Economic analysts think that PA allocation sees drastic cuts every year as a result of ambitious estimate or projection while formulating ADP. They said it is against planning discipline and the estimate should be made in line with ground reality.