One of the major issues that has held back the government's desire to get things done every fiscal year (FY) is the lacklustre performance (in terms of implementation) of the various agencies when it comes to achieving development goals. This Achilles heel has never been properly addressed because it is a complex issue. First, multiple agencies work on similar or same projects creating more problems than it solves. The lack of accountability, i.e., which agency is responsible for what and when things don't pan out according to plan, which agency will answer for it remains a vague area on the governance side. Then of course there is the tendency to inflate the development budget over-and-above the preceding FY, without taking cognizance of the capacity of agencies.
All this is reflected in budget execution. This became more apparent when taking stock of the outgoing fiscal year (FY), where reportedly, various ministries and agencies "spent an aggregate amount of Tk2.44 trillion, accounting for 37.62 per cent of the total Tk6.78 trillion budget outlay, during July-February period of the fiscal year (FY) 2022-23". While in other countries, there is a reflection on what worked and what didn't during the preceding fiscal, that rationale apparently does not work in this country. But it should because ultimately, it is the State's reputation that suffers more than anything else when projects are stuck in the mud for years on end and all this leads to souring of relations with multilateral agencies that provide the bulk of finance either in the form of loans or grants.
According to Ministry of Finance data, while 20.15 per cent of the current budget outlay was implemented, 46.9 per cent of the operating budget (for the purposes of implementation) was expended during the July-February period. This excess expenditure has much to do with the interest rates the government is required to pay on loans taken. That cannot be avoided, which brings us back to the question of implementation. Without timely implementation of development projects, the State will be left with a financial burden that cannot be sustained in the long run. Already it has become a burden, as seen in the operating budget, because every project has a timeline for completion. But in Bangladesh, the general trend has been to overshoot project timelines by years.
Of course, it should be noted that since the war in Europe began and the global economic downturn started, both exports and remittances have hit Bangladesh hard. With the national exchequer running out of dollars by the billions, austerity measures were put in place that sharply hit budget-implementation agencies. The finance ministry's explanation skirts around the issue of poor implementation. Unfortunately, that may take the focus away for a while but the problem will remain. Indeed, going by government data, these interest payments are beginning to hurt more and more since they're coming out of the operating budget allocation.
The issue of implementation is a major issue and it should be treated as such. Years of pleading to strengthen the capacity of the bureaucracy to handle bigger budget outlays fell on deaf years. Issues related to professionalism, hiring the right person for the right position were ignored and now Bangladesh is within sight of becoming a middle-income country. The billions of dollars taken as loans from foreign financial entities to fast-track much-needed infrastructure development projects have not been delivered and now the time to pay back some of those loans have arrived. Even the low-interest payable loans and grants from some multilateral agencies like the World Bank and others are proving challenging. These banks have tried to sit with their Bangladeshi counterparts and resolve the issues, but have had limited success.
Unfortunately, for the country, with global economic downturn, policymakers have had to devalue the Bangladesh Taka against the US dollar to the tune of nearly 25 per cent over the preceding few months. This means the government is now paying much more for interest on outstanding loans. One would think that given the current state of payments, there would be some rethinking about the number of projects that will be undertaken. High profile projects requiring hundreds or billions of dollars of external finance should definitely be revisited. There is little point in increasing foreign debt, especially when the International Monetary Fund (IMF) has set preconditions for keeping the foreign reserve at a certain level.
Upgrading knowledge and skills of implementing agencies needs to be a primary policy focus in the current fiscal. Without improving efficiency of these agencies, there is no reason for complaining about external factors that are purportedly responsible for dismal performance. Failure to improve implementation ultimately defeats the government's own goals about reaching a higher trajectory of growth.
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