Govt ADP portion trimmed by only Tk 7 lakh despite cost-cutting measures

The allocation to the revised annual development programme may trim by only Tk 7 lakh although the government had decided to put low-priority projects on hold in the beginning of the fiscal year because of the coronavirus pandemic.

In the original ADP, the government fund was Tk 134,643.07 crore for the fiscal year of 2020-21. The revised allocation may see it fall to Tk 134,643 crore.

The planning ministry is going to propose the revised ADP at the meeting of the National Economic Council (NEC) today.

In July, the government put a hold on the implementation of government funded low-priority projects involving Tk 40,000 crore as part of its cost-cutting move to free up funds for the productive sectors amid widening revenue shortfall caused by the devastating impacts of the pandemic.

The projects under the health and agriculture sectors, the two most priority areas for the government, were spared from the cost-cutting move. 

Later the finance ministry gradually softened its stance on the disbursement of funds for the low-priority projects bowing down to the pressures from the line ministries and also because of the improvement in revenue collection.

The government has also allowed the line ministries to reprioritise the project list. 

The government has halted the release of 25 per cent of the fund for the low-priority projects, meaning ministries and divisions can spend 75 per cent of the allocation.

A senior official of the finance ministry said they are now emphasising on increasing expenses of the government fund to give a boost to the economy.

Following the approval of the revised ADP, the finance ministry will direct the ministries to spend 10 per cent more from the government allocation, said the official.

As a result, the local fund of the ministries would not be trimmed much.

An official of the planning ministry said though the ministries and divisions send back funds from the foreign portion of the projects, they are unwilling to cut back on the spending from the state portion.

Even after being directed, the ministries cut expenses worth only Tk 10,000 to Tk 50,000 from the local portion, the official said. As a result, the planning ministry managed to trim down the government portion of the ADP by only Tk 7 lakh in the revised ADP.

In the NEC meeting today, the planning ministry will propose to slash the development budget by 3.26 per cent, or Tk 7,501.79 crore.

The size of the revised ADP would be Tk 197,643 crore, which was Tk 205,144.79 crore in the original budget.

The use of foreign funds would trim by 10.64 per cent to Tk 63,000 crore from Tk 70,501.72 crore.

Though the ministries were unwilling to cut the expenses of the local portion, the implementation of the ADP has been slow in the last seven months.

Ministries and divisions spent Tk 61,048 crore in the July-January period, which is the lowest in the last five years, according to the Implementation Monitoring and Evaluation Division.

Expenditure from the state coffer dropped 16 per cent to Tk 39,342 crore. Spending from the foreign portion of the ADP declined marginally.