ADP squeezed as foreign project-aid flow falters

---

Sheikh Shahariar Zaman
The government has downsized the annual development programme (ADP) allocation for the current fiscal following a lower-than-expected level of external project aid.
The finance ministry has slashed Tk 15.45 billion from the ADP due to non-availability of project aid.
Finance minister Abul Maal Abdul Muhith in his budget speech in June had said that Tk 128.45 billion was expected to come as project aid in the current fiscal but the country received only Tk 30 billion in project-aid during July-December period of the FY 2009-10.
"The main problem does not lie with the foreign financing, rather it lies with the lack of implementation capacity," former finance adviser Mirza Azizul Islam told the FE.
There is about $7 billion aid in the pipeline, but the government does not have the capacity to utilise the funds, he said.
"The foreign financing should not be a concern for the government as it can buy dollars from the central bank, but unless it makes the implementation capacity better, there will be no improvement in the ADP expenditure," he added.
The Bangladesh Bank (BB) has a foreign reserve of over $10 billion, which can meet import payment requirement for a six-month period.
Mirza Azizul Islam expressed concern over the failure to implement Power Division projects as he finds that a dearth of electricity is the key impediment to development activities.
"If electricity is not supplied to industries and irrigation, production will be hampered leading to higher unemployment and fall in growth rate," he said.
Mr Mirza said there is no short-term solution to increasing the implementation rate and the government should take a long-term strategy to build the capacity.
"The rational system is if a person makes mistake, he or she will be punished but if he or she does not work, they will also be punished," he said.
But, unfortunately, nobody is punished here for not working, he added.
It is expected that project-burdened ministries and divisions including power, communications, water resources and health would get less than the original allocation in the current fiscal.
The government has already taken initiatives for some mammoth projects including Padma Bridge, the four-lane Dhaka-Chittagong Highway, flyovers and power plants.
AMA Muhith in his budget implementation progress report before parliament last week said the power division is not likely to spend Tk 9.38 billion from his original allocation of Tk 31.33 billion.
The division has 42 projects and in the first six months of the financial year, it spent only Tk 6.75 billion or 21.6 per cent of the total allocation.
The minister informed parliament that the transport sector, which includes road, rail, water and air ways, is expected to spend Tk 7.93 billion less than the original allocation.
Physical planning, water supply and housing sectors trimmed the development expenditure by Tk 6.36 billion and health and family welfare by Tk 2.53 billion in the current fiscal.
The government has slashed a total of Tk 20 billion from the ADP allocation in the current year's budget.