High on ADP fund spending, low on real physical performance

It's all about implementation of the Annual Development Programme (ADP). In the first 10 months of the current fiscal year (FY), 2013-14, the government agencies could implement only 67 per cent of the revised ADP outlay, out of an aggregate allocation of Tk 600 billion. This is, however, 61 per cent of the original ADP outlay of Tk 658.72 billion. The original ADP outlay was trimmed by 8.91 per cent in April last.
But surely, as the usual trend suggests, the government will have to race against time to raise the rate of revised ADP implementation up to 90 to 95 per cent at the close of the fiscal year. The successive government are practising this over the years without ensuring actual physical progress of the development projects, besides risking their quality and compromising transparency in financial management.
The efficiency of the government's project-execution agencies, according to some economic analysts, has not improved over the years as such agencies have not succeeded in fully utilising the ADP funds in real terms even after the usual downward revision of original allocations every year. In the last fiscal, the implementation agencies could spend the highest 96 per cent of the revised ADP allocation.
The ADP provides the conduit to the government for public investments through which various infrastructure-related development projects are taken up for implementation, besides those in social sectors to help alleviate poverty.
Over the years, the disconcerting rate of actual ADP implementation, in relation to any rational physical performance-related matrix, has been persisting, in tandem with undue haste by different ministries and divisions of the government to show utilisation of development funds allocated to them as high as possible. In the process of this, the quality of projects is often compromised, leading to various allegations of mismanagement, misappropriation and other related irregularities. Added to this, an overbloated ADP, in the context of implementation capacity of execution agencies, results in dispersal of resources over a large number of projects. This also leads to delays in implementation and consequent wastage of funds.  
Under such circumstances, the government, as many critical analysts note, needs to frame a realistic ADP with more functional and administrative oversight capacity, with the goal of ensuring quality expenditures on development projects. The practice on the part of project-implementing agencies to accommodate unimportant and otherwise politically-motivated projects, does also lead to an inflated size of the ADP.
In recent years, the government is reported to have undertaken more than 1,000 development projects under the original ADPs during the period. But their number has now risen to more than 1,200 projects, after revision of successive ADPs. This highlights the imperative, for prioritising development projects after proper feasibility studies. Those priority projects should get adequate funds, alongwith strengthening of arrangements for monitoring their performance so that these are implemented in time and their quality of work is ensured. Only then, the cost overrun factors can be avoided and the benefits of the completed projects can also be reaped by the economy sooner rather than later.
The original ADP is always found to be worked out, on the basis of demands for funds by various ministries and divisions. If the government would have evaluated project implementation capacity of such relevant agencies, in the light of earlier fund allocations for them and their pattern of uses of such funds, their real strength could be properly reflected. But this does not really happen at the end of the day, creating room for any possible financial mismanagement.
Many analysts hold the view that the Medium-Term Budgetary Framework (MTBF) has not been functioning properly and as such the review of the development budget at the fag end of a fiscal year is not properly made. Had the government framed a realistic ADP with proper oversights on the project-implementing agencies, while shunning the practice of revision at the end of the day, there would have been much better results, they observe.
With private investment -- both foreign and domestic -- now remaining sluggish, the employment opportunities are not expanding. Under such circumstances, accelerated and efficient government development spending can help make a difference, both in terms of employment generation and enhancing the purchasing power of the people.
On its part, Implementation, Monitoring and Evaluation Division (IMED) of the government has been stating that the quality about execution of the development projects has now improved to a much greater extent than before. Some measures, taken up by the division in recent years, are helping to quicken the pace ADP implementation, according to this division. It has claimed that the overall inspection has improved, particularly in past few months. But in reality, such claims are, according to some field-level independent observers, are not factual. The quality of the project work is still reportedly being compromised and the pace of actual implementation of different development projects is still pretty slow.
However, the implementation of ADP has always been a challenging job of every successive government. Since the inception of Bangladesh, no government could successfully utilise the whole chunk of development fund earmarked in the original annual budget.
In order to inject a fresh momentum to the pace of ADP implementation, such observers and analysts have suggested for appointment of project directors from the private sector. ADP allocation in Bangladesh is otherwise not quite big, in terms of the size of the country's gross domestic product (GDP). But the original allocation of fund under the ADP cannot even be utilised properly because of the lingering problems about capacities of the ministries and divisions to implement the development projects. There had been many discussions on this subject in the past. But no tangible results are yet seen about improvements in such capacity.
A number of steps, taken up by the Planning Commission (PC) to improve the implementation capacity of the government agencies, are not working as they are reportedly failing to make timely procurement which constitutes, a major component of the ADP. The PC has earlier issued some guidelines to the development budget-spenders, keeping in view their monthly actions and procurement plans in order to help streamline project implementation. But those guidelines still remain in paper only.
There is hardly any option now for the government other than raising such implementation capacity as it cannot afford any big cutback on the ADP size. This is so simply because of the fact that it needs to enhance public development expenditure to generate new employment opportunities, increase domestic demand for sustainable growth of the economy and facilitate private sector investments on a larger scale by creating enabling conditions for the same.
    szkhan@dhaka.net