Austerity, scarce project- aid matching funds squeeze ADP

Tightfisted spending for scarce funds amid global crisis squeezes Bangladesh's Annual Development Programme in the current fiscal as many public agencies seek smaller amounts than their project- aid (PA) outlay, officials say.
They are guesstimating such development-budget cuts with hints from consultations leading to revision of the ADP current fiscal year (FY) 2022-23, as government ministries and agencies were seeking lower funds from the foreign aid or PA portion of the development budget following government austerity in development spending.
On Monday, the Economic Relations Division (ERD) concluded a 6-day consultation with all the ministries and agencies prior to revising the current PA portion in the Tk2.46-trillion ADP.
Out of the total ADP outlay, the government allocated Tk920 billion as PA, to be mobilised from foreign development partners.
The PA money comes from assistance provided by different development financiers, like the World Bank, the Asian Development Bank (ADB), Japan, China, the Asian Infrastructure Investment Bank (AIIB) and the United Nations.
"We have completed consultation with all the ministries, divisions and agencies of government over the last six days. Many big ministries have sought lower funds than their PA allocation in the proposed revised budget," a senior ERD official told the FE after Monday's meeting was over.
He said the big ministries like power, agriculture, water resources, local government, energy, and education sought lower funds for the upcoming Revised ADP (RADP) than their current allocation in the original ADP.
A senior Power Division official said since the finance ministry had imposed several restrictions on budget expenditure, the project implementation in time might be affected and thus foreign-aid expenditure will also get squeezed to some extent for scant matching funds.
"If we want to spend project aid in the foreign-aided development projects, we also need matching funds from government internal resources (GoB) proportionately. However, we are not getting adequate GoB funds in time," he says about the reasons for the slowdown.
Another official at the Shipping Ministry said although the development-budget expenditure from the allocated Tk920-billion PA had been better than that of the GOB funds till October this fiscal, they might not be able to spend the entire foreign aid for lack of adequate matching GoB funds in the ADP.
"So, we are seeking a bit lower PA in the upcoming RADP than our current outlay," he adds.
The government ministries and agencies spent 14.43 per cent of the total Tk 920-billion PA allocation in the ADP during July-October period this FY2023, Implementation Monitoring and Evaluation Division (IMED) data showed.
However, in the same time they spent GoB funds at a lower 12.21-percent rate from the total the Tk1.49- trillion worth of allocation in the development budget.
"We have completed consultations with all ministries. Now we will accumulate their revised fund demands. Then we will finalise a PA allocation for the upcoming RADP," says an ERD official.
The revised PA allocation is likely to be finalised next month (January) for forwarding to the Planning Commission (PC) for recasting the ADP.
Meanwhile, a PC official said they would seek revised fund demands from all the ministries and agencies shortly aiming to prepare the RADP for the current FY2023.
"We will revise the GoB budget in the ADP. The ERD will send us the revised PA allocations. Then we will finalise the RADP," he told the FE.
The global economic recession, driven by corona restrictions and Ukraine war disruptions, has affected Bangladesh's economy, too, forcing the government to go for belt-tightening under a recipe of austerity.

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