Project aid in ADP may be slashed as govt squeezes spending

A government policy change on high public expenditure is set to result in pared-down external fund allocations in the current development budget, officials said Monday.
The government is likely to slash its project aid by 15 per cent in the upcoming revised annual development programme (RADP), one of the biggest cuts in recent years, for trimming down spending in the wake of economic slowdown, they said.
"Although foreign aid is available in the pipeline, but the government has taken steps to cut the PA from its development budget due to its cautious approach in public spending amid the country's sluggish economy," said a senior Ministry of Finance (MoF) official.
The ADP will be cut heavily this year as the government has taken very cautious approach in its spending, a senior Planning Commission (PC) official said.
Not only the project aid, the allocations from government's internal resources for the current fiscal year (FY) 2023-24 will also be cut, he added.
Meanwhile, PC officials have said they are likely to downsize the overall ADP as the government spending will have to be cut.
The PC official said they may cut the PA by some 15 per cent to Tk800 billion from the current allocation of Tk940 billion.
"Although the Economic Relations Division (ERD) has prepared a Tk 845-billion PA for the upcoming RADP, we may revise the recommended allocations again to keep it within some Tk800-billion limits," says the MoF official.
The allocation from the government's internal resources is likely to be cut to Tk1.46 trillion in the upcoming RADP, too, from the current allocations of Tk 1.64 trillion in the original ADP for the current FY2024.
An ERD official said they had already cut the PA allocations to Tk 835 billion, including some block allocations, in the forthcoming RADP.
"Few weeks ago, we consulted different ministries before the preparation of the revised PA allocation for the upcoming RADP. Then we have finalised it and already sent it to PC," he added.
Another official at the PC told the FE that they had already got the revised PA allocations from the ERD. "Now, we are working to finalise the RADP for the current fiscal."
The ERD official said, "Some large development-budget holders have sought lower foreign-aid funds than their current allocation in the upcoming RADP. So, we are forced to cut the total PA by some 11 per cent."
Meanwhile, a PC official said although many government ministries and agencies had performed better in PA utilization over the first five months (July-Nov) of the current FY, but their allocations would to be slashed too.
According to the Implementation Monitoring and Evaluation Division (IMED), the government ministries and divisions had executed 19.17 per cent of the total Tk 940 billion worth of PA allocations in the current ADP.
The spending rate is nearly 2.0 percentage points of the average ADP-implementation rate in the current FY2024, he added.
"Since the development partners have the strict monitoring on the PA-supported projects, the implementing agencies prefer implementation of the GoB-funded projects.
The GoB-funded projects usually have less monitoring than the PA-supported one," he added.
In the last FY2023, the government trimmed the PA down to Tk 745 billion from the original ADP allocation of Tk 930 billion.

[email protected]