ADP cut prompted by changed situation

Adhering to the basic principles of flexibility and adjustability, the interim government is mulling over a substantial cut in the annual development budget for the current fiscal year by a big margin of Tk 500 billion from the local-resources part of the budgetary outlay. And that is thanks to the nation's appalling economic condition left behind by the immediate past government. This is no doubt a deep cut in comparison with the reductions in the ADP allocations by Tk 190b and Tk 180b in FY 23 and FY 24 respectively. A pressing financial need and the traditionally poor project implementation capability of the feeble government agencies also prompted the action. It may be mentioned here that the actual ADP implementation rate sank to less than 8 per cent during the July-October period this year. According to a report published in this paper, the budget-trimming process as part of austerity measures will bring down the ADP allocation to Tk 2.15 trillion from the original Tk 2.65 trillion. A downsized but achievable ADP is much better than a robust one far beyond the existing financial and implementation capability. However, maximum efforts must be made for the successful execution of the revised plan. At the same time, causes behind poor implementation capacity should be found out and removed.

The amount to be saved through trimming of the allocation is likely to be used to pay the dues that the government owes to the local private and foreign power generation companies as outstanding and other charges for power purchase. The cut in the ADP allocation will make a revision of the development programme and resetting priorities in the changed situation necessary. While plan for infrastructural development and budgetary allocation for projects are integral parts of a government's yearly economic programme, revision of project plans and fund allocation adjustment to cope with prevailing circumstances are also regular exercises. This is particularly true in case of deficit financing due to failure of the revenue authorities to mobilise adequate funds from domestic sources. The annual development plan adopted by the deposed regime can no longer be implemented with the present weakened financial condition, which is the outcome of ruthless plundering of the national resources by the deposed regime. Revision of development programme and budgetary allocation is nothing wrong and unusual; in fact, it is done almost every year. Not just resource constraint, inclusion of many unnecessary and politically-motivated projects, recasting of ADP is a must do job. Such a budgetary modification should rather be viewed as a pragmatic way of doing things in a changed situation. If efforts are made to execute the unmodified version of the ADP in spite of financial constraint, the government will have to depend more on bank borrowing, leading to crowding out effect.

Besides, the rate of execution of development projects by government agencies, which was less than 8.0 per cent during the first four months of the current financial year is an issue that the government can hardly ignore. The execution rate was one of the poorest in recent years. So, while asking the agencies to concentrate more on raising their project execution rate, it would be more prudent to divert unused funds to meet some pressing needs including payment of arrear bills in rhe power sector.