Finance goes tightfisted, trims ADP down to Tk 2.0t

Government's finance authority gets further tightfisted with the current development budget downsized by Tk 300 billion to Tk 2.0 trillion, officials say, citing hard times on the economic front in the interim period.

The Finance Division has slashed Annual Development Programme (ADP) outlay for the current fiscal year 2025-2026 and reset the spending ceiling for the Revised ADP (RADP).

Of the total allocation, Tk 1.28 trillion will come from government exchequer, while Tk 720 billion will be sourced as project aid in the form of loans and grants from development partners.

At the beginning of the fiscal year, the National Economic Council (NEC) had approved the Tk 2.30-trillion ADP, including Tk 1.44 trillion from local resources and Tk 860 billion as project aid.

However, all of government ministries and divisions utilised Tk 113.81 billion or only 4.95 per cent of the total allocation in the first quarter of the year.

The Finance Division Wednesday sent the RADP ceiling to the Planning Commission trimming by 13.04 per cent following slow implementation, resource constraints, and sluggish revenue collection.

Officials at the Programming Division of the Planning Commission say the projection sent by the Finance Division indicates the upper ceiling for the RADP. The final RADP outlay could be smaller, as project-wise allocation estimates will be finalised following consultations with the several ministries and divisions by the Planning Commission and the Economic Relations Division (ERD).

An analysis shows allocations from domestic sources are likely to get reduced by Tk 160 billion, representing an 11.11-percent cut from the original outlay, while project aid from foreign sources is expected to decline by Tk 140 billion, or 16.28 per cent of the initial allocation.

Data from the Implementation Monitoring and Evaluation Division (IMED) of the Planning Ministry reveal that the RADP in the last fiscal was Tk 2.16 billion. RADP in the current fiscal is set to be Tk 160 billion or 7.41-percent lower than the last fiscal year's.

The IMED data also reveal that the RADP in the fiscal year 2021-2022 was Tk 2.1 trillion, which indicates that the proposed RADP for the current fiscal is the lowest among the last five years.

On the other hand, the government funding in the RADP of the current fiscal year is the lowest among the last seven years.

The letter from the Budget Wing-1 of the Finance Ministry has instructed the Planning Commission to set the RADP allocation with clear priorities, cutting allocations for slow-moving projects and ensuring funding for high-priority and near-completion initiatives.

Earlier, between November 2 and 5, the ERD hosted multiple review meetings to finalise foreign-funded loans and grants, forming the basis for the budget revision.

For the first time, the government aims to finalise the RADP by mid-December to ensure development spending remains on track ahead of the next general election.

Planning Adviser Dr Wahiduddin Mahmud says last year's delays in project implementation would not repeat.

"We want the RADP finalised on time to accelerate development activities. Approving it in December or January will stabilise project execution, avoiding the rush seen in previous years," he tells the FE.

Planning Commission officials say the review process will consider project progress, spending capacity, and implementation bottlenecks, which would lead to a lower RADP than the ceiling as the actual demands from ministries are lower.

Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), tells The Financial Express that a larger development budget is of little value if implementation remains slow.

He adds that an early revision of the ADP can be beneficial only if it is accompanied by faster execution and improvements in the quality of spending.

The economist also emphasizes that the government should initiate a clear action plan to fully utilise the revised development budget, ensuring sustained development while maintaining a steady flow of money in the market.

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