The finance ministry has softened its stance on the disbursement of funds from the annual development programme for the low-priority projects bowing down to pressures from the line ministries and also because of the improvement in revenue collection.
Now, 25 per cent of the allocation from the ADP would remain halted for the ministries because of the lingering pandemic, down from 30 per cent previously.
The finance ministry would not issue any circular to this effect but has already communicated with the line ministries about the relaxation, said a finance ministry official.
The government has also allowed the line ministries to reprioritise their project list. Now a ministry can move up a project from the low-priority list to the medium or high priority lists.
If a ministry moves up a project from the low-priority list, it has to move down a project from the medium or high priority lists to the low-priority list so that the allocation is not affected.
In July, the government put a hold on the implementation of the low-priority development projects 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 in its fight against the deadly virus, have been spared from the cost-cutting move.
The latest relaxation from the finance ministry came after ministries and divisions expressed dissatisfaction over the decision to put on hold the implementation of the low-priority projects, said a planning ministry official recently.
Because of the halt, the implementing ministries and divisions have been facing problem as they can't clear bills for contractors since the finance ministry is not disbursing funds against the projects, said the official.
Recently, the roads transport and bridges ministry asked the finance ministry to reconsider its decision.
The recent improvement in the revenue collection situation also prompted the finance ministry to soften its tone.
Revenue collection grew 7.85 per cent year-on-year in August and the recovery is expected to keep up the momentum as the economic activities are picking up although the uncertainty caused by the pandemic persists.
The growth is, however, 0.16 per cent year-on-year in the July-August period of the current fiscal year, data from the National Board of Revenue showed.
"As the fund position is better, we are giving more concessions," said the finance ministry official, adding that revenue collection would grow in September as well.
The fund disbursement for the low-priority projects has been postponed for a temporary basis, he said.
The criteria rendered a project low-priority if it is slow-moving, has completion deadline for six to seven years and is construction-related. If these projects are pushed back by six months or a year, it would not cause much problem for the country.
The projects under the ADP have been categorised as high, medium and low-priority to ensure the best use of limited resources, said the finance division in July.
The finance ministry would review its decision on December. If the revenue situation improves further, it may offer more relaxation and even completely withdraw the belt-tightening measure, said the official.
There are some projects in the low-priority category that would be completed by the current fiscal year or are foreign-funded and this sub-group of projects have not been put on hold.
The finance ministry would sit with the entities implementing the mega projects to speed up their construction.
Development expenditure dropped 10.18 per cent year-on-year to Tk 5,097.79 crore in August as activities are yet to pick up because of the lingering coronavirus pandemic.
The ADP for the current fiscal year includes 1,724 projects, according to the data of the Implementation Monitoring and Evaluation Division under the planning ministry.
The government has set aside Tk 214,611 crore to carry out development activities in 2020-21.