Problems of ADP implementation
Monday, 1 June 2009
Syed Jamaluddin
A few days back, the National Economic Council (NEC) approved the Annual Development Programme (ADP) of Tk 305 billion for the fiscal year (FY) 2009-10. This allocation is a record high in Bangladesh. This is 32.61 per cent higher than the revised allocation of the current year's ADP. This has triggered a debate over the size of ADP. A total of 886 projects have been included in the new ADP. During the meeting, the Prime Minister asked all the ministries and government agencies to implement their projects in time. This sermon of the prime minister is a kind of ritual which is done at the time of approval of ADP. It is difficult to say if this will make a difference considering our past record.
Economists are of the opinion that ADP for the next fiscal year is highly ambitious. It is stunt and it will be too difficult to implement. They say the government must increase development expenditure and take special steps to implement the programme. They have also suggested implementing the recommendations of the public expenditure review commission, which was chaired by a former caretaker adviser who said that 'such a big ADP is simply a stunt and will be hard to implement.' The former adviser was unhappy because nobody took his report seriously. This report was for streamlining government spending.
When asked about the ambitious ADP, the Planning Minister said that the government had no option but to increase the public investment to expedite the country's development. The Awami League (AL) government could not settle for a lower size ADP because of certain compulsions.
The research director of Bangladesh Institute of Development Studies (BIDS) said that in spite of a number of justifications for larger ADP, the allocation of Tk 305 billion seems too ambitious and risky. This allocation requires commensurate growth in revenue earnings which is unlikely to be achieved given the current outlook for domestic and global economy. According to him, in the event of a significant shortfall in revenue collection, the government will either have to raise borrowing or downsize the ADP, resulting in waste of resources due to abrupt stopping of flow of funds to the ongoing projects. The quality of ADP already burdened with low priority projects from the past governments is likely to be compromised further with the inclusion of a large number of new projects. The industry minister's recent announcement to reopen all closed down public enterprises to generate employment, adds to this fear. The reopened mills and factories will have to be funded under the ADP, irrespective of their profitability.
The BIDS research director has also commented that realisation of ADP target of Tk 305 billion will require more than 50 per cent improvement in the capacity of our project implementation machinery in a single year. The government may arrange training programmes for orientation of project officials for better project implementation. Party affiliation should be avoided in choosing project officials to ensure better delivery of services.
It is understandable that in its first budget, the newly elected government would like to be seen delivering on the promises it had made in the election campaign. But the implementation of the ADP has remained a major policy concern for many years. It cannot be simply wished away. The government has to be ready to implement the ADP properly.
There is a growing realisation among policymakers that the bottlenecks to ADP implementation need to be addressed to increase the rate of public investment expenditures and improve its effectiveness. The bottlenecks range from procurement snags to land acquisition, court cases, delays in approval and donor conditions. The government has been facing these problems for long, but there were no remedies in place. Meetings of ministers with secretaries and heads of agencies did produce little result.
A few suggestions are proposed here for consideration of the government. The finance ministry makes allocation of project funds to individual ministries. Those ministries in turn make allocation to the implementing agencies. Lots of foot work as well as speed money are involved in getting release of funds. The government may consider, if allocation can be made directly to the user agency. This will save a lot of time and inconvenience. The ministries may object to this but such objection is more for prestige than substance. The ministries will certainly be kept informed. The government has the experience of making direct allocation to upazila parishads
Project approval is a big issue. There are several stages of project approval both for technical assistance projects and investment projects. One major issue will be highlighted here. Project proposals are received by the planning commission from the ministries and agencies. Thereafter, these proposals are scrutinised at the level of the Commission. Their observations are then forwarded to the ministries/agencies for resubmitting their projects after correction .This is a time consuming process. It is proposed for consideration that project processing should be completed in the planning commission without sending observations back to the ministries/agencies. Ministries/agencies must provide all inputs to the planning commission. Necessary logistic supports have to be provided by ministries/agencies to the planning commission for approval of the project once and for all. No back and forth correspondence between the planning commission and the agencies should be allowed. This mechanism will produce faster approval of projects. Amendments may also be made by the planning commission. Officers from ministries/agencies will have to maintain constant liaison with the planning commission. This will be an unique experience which will be beneficial for the country as a whole.
The government will be embarking on public-private partnership programme (ppp) in the next budget. This will be a new exercise. The rules and procedures of the system must be made flexible to ensure faster implementation of projects. Allocation to this programme must be made directly and not via line ministries. There should be adequate delegation of authority to implement the projects. High hopes are pinned on the PPP programme. The government will have to set up an appropriate authority early to deal with ppp projects.
Something has to be done to expedite project implementation. There was enough discussion on this subject. Now is the time for action. There is no room for failure in this area .The problems of project implementation have proven difficult to surmount historically but we must make a break with the past. The Implementation and Monitoring Division (IMED) under the ministry of planning has to be given the job of producing innovative ideas for quick implementation of projects. They should not be busy with routine work only. It will take much more than intention to accelerate the process of implementation.
The writer is an economist and columnist
A few days back, the National Economic Council (NEC) approved the Annual Development Programme (ADP) of Tk 305 billion for the fiscal year (FY) 2009-10. This allocation is a record high in Bangladesh. This is 32.61 per cent higher than the revised allocation of the current year's ADP. This has triggered a debate over the size of ADP. A total of 886 projects have been included in the new ADP. During the meeting, the Prime Minister asked all the ministries and government agencies to implement their projects in time. This sermon of the prime minister is a kind of ritual which is done at the time of approval of ADP. It is difficult to say if this will make a difference considering our past record.
Economists are of the opinion that ADP for the next fiscal year is highly ambitious. It is stunt and it will be too difficult to implement. They say the government must increase development expenditure and take special steps to implement the programme. They have also suggested implementing the recommendations of the public expenditure review commission, which was chaired by a former caretaker adviser who said that 'such a big ADP is simply a stunt and will be hard to implement.' The former adviser was unhappy because nobody took his report seriously. This report was for streamlining government spending.
When asked about the ambitious ADP, the Planning Minister said that the government had no option but to increase the public investment to expedite the country's development. The Awami League (AL) government could not settle for a lower size ADP because of certain compulsions.
The research director of Bangladesh Institute of Development Studies (BIDS) said that in spite of a number of justifications for larger ADP, the allocation of Tk 305 billion seems too ambitious and risky. This allocation requires commensurate growth in revenue earnings which is unlikely to be achieved given the current outlook for domestic and global economy. According to him, in the event of a significant shortfall in revenue collection, the government will either have to raise borrowing or downsize the ADP, resulting in waste of resources due to abrupt stopping of flow of funds to the ongoing projects. The quality of ADP already burdened with low priority projects from the past governments is likely to be compromised further with the inclusion of a large number of new projects. The industry minister's recent announcement to reopen all closed down public enterprises to generate employment, adds to this fear. The reopened mills and factories will have to be funded under the ADP, irrespective of their profitability.
The BIDS research director has also commented that realisation of ADP target of Tk 305 billion will require more than 50 per cent improvement in the capacity of our project implementation machinery in a single year. The government may arrange training programmes for orientation of project officials for better project implementation. Party affiliation should be avoided in choosing project officials to ensure better delivery of services.
It is understandable that in its first budget, the newly elected government would like to be seen delivering on the promises it had made in the election campaign. But the implementation of the ADP has remained a major policy concern for many years. It cannot be simply wished away. The government has to be ready to implement the ADP properly.
There is a growing realisation among policymakers that the bottlenecks to ADP implementation need to be addressed to increase the rate of public investment expenditures and improve its effectiveness. The bottlenecks range from procurement snags to land acquisition, court cases, delays in approval and donor conditions. The government has been facing these problems for long, but there were no remedies in place. Meetings of ministers with secretaries and heads of agencies did produce little result.
A few suggestions are proposed here for consideration of the government. The finance ministry makes allocation of project funds to individual ministries. Those ministries in turn make allocation to the implementing agencies. Lots of foot work as well as speed money are involved in getting release of funds. The government may consider, if allocation can be made directly to the user agency. This will save a lot of time and inconvenience. The ministries may object to this but such objection is more for prestige than substance. The ministries will certainly be kept informed. The government has the experience of making direct allocation to upazila parishads
Project approval is a big issue. There are several stages of project approval both for technical assistance projects and investment projects. One major issue will be highlighted here. Project proposals are received by the planning commission from the ministries and agencies. Thereafter, these proposals are scrutinised at the level of the Commission. Their observations are then forwarded to the ministries/agencies for resubmitting their projects after correction .This is a time consuming process. It is proposed for consideration that project processing should be completed in the planning commission without sending observations back to the ministries/agencies. Ministries/agencies must provide all inputs to the planning commission. Necessary logistic supports have to be provided by ministries/agencies to the planning commission for approval of the project once and for all. No back and forth correspondence between the planning commission and the agencies should be allowed. This mechanism will produce faster approval of projects. Amendments may also be made by the planning commission. Officers from ministries/agencies will have to maintain constant liaison with the planning commission. This will be an unique experience which will be beneficial for the country as a whole.
The government will be embarking on public-private partnership programme (ppp) in the next budget. This will be a new exercise. The rules and procedures of the system must be made flexible to ensure faster implementation of projects. Allocation to this programme must be made directly and not via line ministries. There should be adequate delegation of authority to implement the projects. High hopes are pinned on the PPP programme. The government will have to set up an appropriate authority early to deal with ppp projects.
Something has to be done to expedite project implementation. There was enough discussion on this subject. Now is the time for action. There is no room for failure in this area .The problems of project implementation have proven difficult to surmount historically but we must make a break with the past. The Implementation and Monitoring Division (IMED) under the ministry of planning has to be given the job of producing innovative ideas for quick implementation of projects. They should not be busy with routine work only. It will take much more than intention to accelerate the process of implementation.
The writer is an economist and columnist