Revenue spending to up 40pc, ADP cut 3.39pc
In a rare budgetary move, the government yesterday approved a reduced Annual Development Programme (ADP) of Tk 25,600 crore for the next fiscal year (FY09), which is 3.39 percent less than the original ADP of the current fiscal year.
The government is also looking to boost the revenue budget by nearly 40 percent in the new budget to be announced tomorrow.
The ADP is usually increased in each budget from the previous year's original ADP to suggest rising development spending despite low implementation rates.
The original ADP for FY08 was Tk 26,500 crore, which was later revised at Tk 22,500 crore.
The approval for the reduced ADP came at a meeting of the National Economic Council chaired by Chief Adviser Fakhruddin Ahmed.
"The ADP has been kept small because we did not want to plan for an ambitious ADP," Finance Adviser Mirza Azizul Islam told reporters after the meeting. "Every year, ambitious ADPs are announced despite knowing that it would not be implemented," he added.
The BNP-led four-party coalition government spent Tk 19,437 crore of their ADP in FY06, the highest in the country's history.
"They spent that much as it was an election year and the amount was allocated for politically important areas, so it was not quality expenditure," Azizul said, adding that compared to that the approved ADP for FY09 is "more reasonable".
"If one takes inflation into account, the real size of the ADP is much smaller than it appears," he said.
In the last 10 months of the current fiscal year, Tk 12,367 crore of the ADP was implemented, which is 46 percent of the original ADP and 55 percent of the revised.
The ADP approved for the coming fiscal year will account for roughly one-quarter of the total budget, which is far smaller than in the previous years.
Azizul said the revenue and ADP budgets are artificially separated because they both have an equal amount of impact on people's lives.
Meanwhile, sources said the revenue budget for FY09 may go up by 40 percent, reaching Tk 74,362 crore, compared to the original revenue budget of Tk 53,114 crore for FY08.
Azizul said the increase in revenue budget is due to an expansion of the social safety net through new schemes, increasing beneficiaries and higher welfare payments.
Rising subsidies, adjusted for price, also account for the rise in the revenue budget.
According to the planning ministry proposal, foreign finances make up Tk 14,590 crore or 57 percent of the next fiscal year's ADP funding while the rest Tk 11,010 crore will come from internal sources.
Foreign funding comprised 49 percent of the original ADP of 26,500 crore for the current fiscal year (FY 2007-08).
The revised ADP of FY 2007-08 later downsized the allocation to Tk 22,500 crore with 64 percent foreign funding and 36 percent internal finances.
The foreign funding was raised in the revised ADP following budgetary supports from foreign donors in the wake of cyclone Sidr and back-to-back floods, planning ministry sources said.
According to the draft ADP for FY 2008-09, Tk 6,120 crore (23.91 percent) has been allocated for agriculture, rural development and water resources management.
In addition to a special allocation of Tk 123 crore, a major chunk of the outlay would be spent on creating food security, sources said.
Meanwhile, Tk 4,310 crore (16.84 percent) is allocated for power development and mineral resources, but sources said dismal implementation rate of past years is likely to continue despite the sectors receiving the second highest priority in the budget.
The government also allocated Tk 3,519 crore or 13.75 percent of the ADP for education and religion.
The transport sector will receive Tk 3,470 crore (13.56 percent), the health sector Tk 2,584 crore (10.10 percent), and 11 ministries will receive Tk 704 crore for the development of the ICT sector.
Besides, the government plans to provide a special allocation of Tk 40 crore to remove regional disparity in development work in certain areas.
Another special programme in Barisal and Khulna--areas a survey identified as the most poverty-stricken--will receive Tk 2,841 crore (11 percent of the ADP).
The ADP will put forward a total of 902 proposals for the next fiscal year, of which 103 are new projects.
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