From ADP to multi-year public investment programme

The size of the upcoming budget 2014-15 is likely to be Tk 2.5 trillion as the finance minister already indicated a couple of weeks back. If it turns out to be so, the growth of public expenditure would be 13.6 per cent compared to that of the outgoing budget. Stakeholders expected a further boost in the budget to recover from one of the highest losses of public and private investment in the history of Bangladesh due to political turmoil and place the economy on a steady growth path. However, the upcoming budget would also remain far behind the projection of the Medium-Term Budgetary Framework (MTBF) that raises question of its credibility, in terms of projection and achievement of budgetary targets.
There are big challenges in attaining the growth target set in the Sixth Five-Year Plan and even in the outgoing budget. The World Bank's projection in early April 2014 is even much lower than that of the government, while we see a visible tug of war on the revised size of the Annual Development Programme (ADP). Indeed, the ADP is widely regarded as  instrumental to achieve higher growth especially when large public investment is required to recover from political ravages last year. At the same time, we must equally have a reform through transition from traditional low-return ADP to a more systematic and high-impact multi-year public investment programme (MYPIP).
Now, why do we need a MYPIP although the projects are multi-year in the ADP? What are the factors that lead to poor performance of the ADP over the years?
Three major factors can be traced to the maladies afflicting the ADP. First, it is the overloaded nature of the ADP with a thousand projects approved and nearly eight hundred unapproved ones but kept in 'green pages' with the possibility of getting green signal by the ECENC during the fiscal year. There are quite a large number of projects coming in politically and with informal trail of many MPs. This creates an apparently 'inclusive' ADP but results in unmanageable number of public investment projects.
Second, the ADP often fails to fully conceive the goals and targets of the Outline Perspective Plan (2010-2021 or OPP) and the Sixth Five-Year Plan (2011-2015 or SFYP). The projects undertaken do not translate as appropriate inputs, although in theory it is apparently in line with the government's strategic planning documents, including the OPP and the SFYP.
Third, due to the annual nature of allocation in line with resource envelope and expenditure targets, there is a rush at the end of every fiscal year that may be termed as 'the fourth quarter syndrome'. For example, more than 40 per cent of the ADP was spent in the fourth quarter in the last three fiscal years while about a quarter of the ADP was spent in the month of June alone. Coupled with the alleged high prevalence of rent- seeking and bribery within the apparatus, it leads to considerable wastage of public resources every year which would have generated much higher returns if these were prepared and implemented as MYPIP.
The idea behind MYPIP is quite simple. If you feel that you need a house, then you will be estimating your resource requirement rather than building some incomplete structures of the house, and ultimately after some years, you find that there is no house at all although you spent a hefty amount. This is exactly what is happening with the ADP despite the fact that the country has set some sensible time-bound targets as illustrated in 'Vision 2021'.     
Currently, there is dual budgeting, emanating from weak linkages between the ADP and the MTBF due mainly to insufficient dialogue between the Planning Commission and the Finance Division. Inefficiency in resource allocation and project implementation is also a result of lack of a medium-term perspective in the ADP process. Since there is an absence of sectoral planning within the MTBF, the sector-wise budgets are merely the sum of ministry-level projects that are mainly flagged by the planning wings of the ministries and divisions, and as a result, the objectives of the SYFP are only weakly materialised. Surprisingly, there is no qualitative shift in development programming even after aiming at becoming a middle-income country by 2021 through double-digit growth.
The MYPIP should be accompanied by Sector Strategy Papers (SSPs) to help coordinate between MDAs and deal with intra-sectoral linkages. The SSP can be a prioritisation tool guiding to populate the MYPIP. Currently, the SFYP provides limited guidance for effective prioritisation between and within sectors. In addition, line ministries should prepare their medium term strategic business plan (MTSBP) within the purview of SSP to strengthen intra-sector linkages. These two should ideally serve as reference frameworks for assessing project proposals instead of the existing programmatic approach resulting in low returns.
Such a structural reform in the ADP process is badly needed instead of populating the ADP with new projects, both in green and other pages, thereby offering formidable tasks for the planning and monitoring agencies of the government. The vision document for an MYPIP can be introduced containing structure, implementation strategy, required changes in the MDAs and capacity development of the Planning Commission and planning wings of the line ministries.
In addition, it requires a comprehensive document outlining the government's strategic vision, the strategic justification for such a transition, and timing and sequencing accompanied by a precise implementation plan. It will reduce uncertainty over the expected amount of resources and the period of multiyear implementation. Besides significantly reducing the large number of small projects and the 'waiting list' approach of the green pages, it will be based on a result-oriented resource allocation, which would be introduced through rigorous prior assessment to lowering risks and uncertainties related to expected return from large public investment. Second, public investment would not suffer from low quality due to expenditure spikes in the fourth quarter, as well as in June.       
Introducing a meaningful MYPIP will crucially depend on close and effective cooperation between the Finance Division and the Planning Commission. There is a need for external support for greater coordination and preparing Joint Budget Strategy Paper, and the roll out of the SSPs and MTSBPs. It will help realise greater coordination and synchronisation in preparing the revenue budget and development programmes.
The government should also initiate a structural reorganisation of the Planning Commission to establish it as the 'core' planning institution. Its role should be redefined to provide strategic guidance to the ministries and formulate indicative plans according to national and sectoral priorities. The government should also strengthen the planning and financial management capacity of its staff through comprehensive formal as well as on-the-job training and capacity building. Also, the capacity of staff within planning wings of line ministries should be strengthened to reduce flow of 'junk' projects from personal trail of the political leaders.
Finally, there is a need for introducing sectoral programmes instead of a plethora of projects in various coloured pages that are quite difficult to implement and monitor. There are good instances of such programmes with rigorous prior homework between the government and donors, such as PEDP and HPNSDP containing interrelated components that bring tangible results. Such a transition would then be instrumental for a meaningful introduction of the MYPIP to come out of the gloomy ADP scenario.
The writer is a senior research fellow, the Bangladesh Institute of International and Strategic Studies. msshova@gmail.com