WB finds massive time lag in ADP projects
The World Bank has found that up to 22 percent of the development projects put in the portfolio over the last five years did not have any expenditure for a year or more.
There is a significant lag between the time projects became part of the annual development programme and the time the actual execution starts, the multilateral lender said in its Public Expenditure Review update. The report looked at fiscal 2009-10 to fiscal 2014-15.
For instance, during fiscal 2011-12, 22.3 percent projects were present in the portfolio for a year or more but no expenditure had actually occurred.
The percentage has declined since then but remains relevant for a large portion of ADP. About 13 percent of the projects now experience such delays in execution.
Nevertheless, some projects have been in the portfolio for many years but no expenditure has happened. Each year an allocation is made for these items but they remain inactive.
Some of these have been in the portfolio for more than five years.
While the number of projects without expenditure declined since fiscal 2011-12, the portfolio could benefit from a "cleaning", with the removal of projects that are no longer politically or financially feasible, it said.
Every year the size of the development portfolio has been increasing with the inclusion of new projects. This practice has resulted in thinning out of the scarce resources with implications for ongoing projects that are already in the portfolio.
As a result, more than 80 percent projects take more time than envisaged at the time of planning.
During the WB review period, the average cost of projects increased faster than the average allocation until fiscal 2013-14, suggesting it will take longer to bring a project to completion.
"High average cost and low average allocation indicate that a project will take a longer time for full implementation and pose resource demands further in the future."
The WB identified another flaw in the ADP system, that of inclusion of new projects each year coupled with slow implementation of the existing portfolio. It contributes to substantial throw-forward of commitments.
Throw-forward is the claim of a development scheme on future development funds. In other words, it is the additional funds required to complete the projects (provided there is no change in scope and cost of the project).
During fiscal 2014-15, about 92 percent of the projects had throw-forward of Tk 50 million or above. Allocation for some projects is clearly insufficient to ensure timely completion, it said.
For example, the ADP of fiscal 2014-15 has 66 projects with allocation of Tk 10 million or less. Much of the throw-forward has been recorded in energy sector, about 80 percent projects, followed by transport and communication (55 percent) and agriculture (48 percent).
The WB report also said a significant portion of the investment projects would take more than five years at the current level of allocation for completion.
For example, during fiscal 2014-15, out of 1,034 projects, 725 would take 1-5 years to fully implement with current level of allocation and around 154 projects (15 percent) would be completed in 6-10 years.
There are around 106 projects that would take 11 to 100 years to implement, while 32 projects would take more time than 100 years to complete.
The report said some projects in the ADP received allocations year after year but without any expenditure.
This may explain only part of the problem. However, as many of the projects that are taking a long time to complete are already under progress with some expenditure already recorded.
Another problem identified by the multilateral lender is that the government prepares the ADP to be presented with the budget document and approved by the legislature.
However, changing priorities result in the inclusion of the new projects in the ADP without parliamentary approval during the year. Therefore, by mid-year a revision has to be made in the ADP to capture these changes.
For example, in fiscal 2013-14, the total number of projects was increased by almost 20 percent in the revised ADP compared with the initial ADP. At the same time, allocation declined somewhat.
"This is not in line with the best budgeting practice and risk focusing on immediate, rather than medium or long-term priorities."
The report also said the operational efficiency of the ADP can be improved, as the performance in terms of planning and execution has been less than desirable.
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