Local govt outspends all other ministries, divisions

Ahead of the upcoming national elections, the local government division (LGD) has spent more money from the annual development programme (ADP) than other major ministries and divisions.

In the July-September period of the current fiscal year of 2023-24, the LGD managed to spend Tk 4,376 crore, a 24 percent increase compared to the same period of the previous fiscal year, according to data from the Implementation Monitoring and Evaluation Division (IMED).

A majority of the top 15 allocated ministries and divisions could not spend more than the previous year in the same period.

Since the start of the current fiscal year, the LGD has started to spend more. Development spending in July, the first month of the fiscal year, was the highest in four years on the back of enthusiastic fund utilisation by the LGD.

"It's not unfair to assume that it may have been driven by the election," noted economist Zahid Hussain told The Daily Star yesterday about increased spending by the LGD.

In July-September of FY24, the LGD managed to spend Tk 4,376 crore, a 24 percent rise year-on-year

Selim Raihan, a professor of economics at the University of Dhaka, said that the LGD usually takes on small projects but spends more than other ministries. Ahead of the election, this spending increases.

"Since the country's inflation is now elevated, if the LGD spends a higher amount, it may instigate further inflation," said Raihan.

Abul Kashem Md Mohiuddin, secretary to IMED, said LGD's higher spending was not related to the upcoming election.

"It's a common trend since there are a number of projects being implemented by them," said Mohiuddin.

The government is working in rural areas according to plan, aiming to give them urban status by constructing bridges and culverts, he added.

Due to delays of government projects in the power sector, the government has to purchase power at a higher rate from the private sector. As a result, a huge amount is spent on capacity charges.

Despite this being the case, the power division's spending decreased in the first quarter of the current fiscal year compared to the previous year.

In the July-September period of this fiscal year, the power division spent Tk 2,740 crore, down 28 percent from Tk 3,790 crore compared to the same period last year.

The Ministry of Science and Technology witnessed a 74 percent downturn, spending Tk 490 crore compared to Tk 1,905 crore in the same period the previous year.

The bridges division spent Tk 925 crore, down 18 percent, while the health services division spent Tk 534 crore, down 7 percent.

"Firstly, the lower spending of these ministries may be due to the government's austerity measures," said Hussain, also former lead economist of the World Bank's Dhaka office.

"Secondly, the dollar crunch may contribute to lower spending on government-funded projects."

Raihan added that government officials moving more slowly ahead of the general elections could be another reason behind slow project implementation.

However, the first quarter of the current fiscal saw the lowest implementation rate of the overall ADP in the last eight years, standing at 7.5 percent.

All government ministries and divisions spent Tk 20,609 crore from the ADP in the July-September period of this fiscal year.

It was Tk 21,895 crore, or 8.55 percent higher, in the same period last year.

However, the IMED secretary vowed to strengthen their monitoring to implement projects in a timely manner.