ADP Needs Speedy Implementation
February 2nd, 2021 at 11:02 am
ADP Needs Speedy Implementation

by Md Mazadul Hoque in Dhaka

Ahead of its first budget for 1972-1973, newly independent Bangladesh was faced with financial crisis to balance its needs and available funds. The country’s first prime minister Tajuddin Ahmed, also the finance and planning minister, piloted the historic Taka 786 crore budget for a war-ravaged country. Sadly, he was assassinated in jail in 1975 along with three other national leaders.

Total amount of expenditure for Annual Development Programme (ADP) was Taka 501 crore. Amount of Taka 318.3 was allocated for the development projects all over the country depending on foreign aid. Many friendly states came forward to extend their helping hand in implementing the projects under ADP. The grants with long term credits came from India, Soviet Union, Sweden, Canada, UK, West Germany, Japan, Denmark and Holland. Subsequently, the Taka 394 crore  aid from foreign sources for Taka 525 crore ADP implementation in 1974-75 fiscal year was highly expected. Around Taka 700 crore was targeted to get as foreign aid in executing Taka 794 Programme in FY 1975-76.

To note that the share of foreign funds in financing ADP allocations was more than 70 percent until 1979-80. It dropped to about 64 percent in the following two years and then again increased to about 80 percent in next three years. The share was more than 90 percent in the fiscal year 1987-88 and 1990-91. However, it started to decline in successive years and was 66 percent in 1995-96. In 2000-2001, the estimated size of ADP was Taka 175 billion, about 43 percent of which were planned to have been financed by foreign aid.

The National Economic Council (NEC) approved Taka 2,05,145 crore ADP for 2020-21 fiscal year  giving the highest priority to the transport sector. Out of the total ADP outlay, Taka 1,34,643 crore will come from the local sources while Taka 70,502 crore  or close to 35 percent from the foreign sources. Around 1,584 projects have been undertaken under 2020-21 ADP. The new ADP for present  fiscal year is Taka 12,224 crore higher than the revised ADP of the outgoing fiscal year 2019-20  which was Taka 1,92,921 crore. Besides, a total of 61 projects have been included in the list of Public Private Partnership (PPP) initiative in current ADP. The new ADP for FY21 witnessed a record Taka 5,898.17 crore block allocation to spend that amount in case of any natural disaster or in any national need. The block allocation is also 2.87 percent of the overall ADP allocation.

There observed wide criticism from time to time regarding ADP implementation. In Bangladesh context, projects under ADP in every fiscal year take huge time to be implemented. The reasons behind so delay in executing projects are many. It is important to note that many projects are suddenly undertaken based on political consideration. The projects had been taken without feasibility study for pandemic situation . Recently, a reputed business daily reported that the government has included some 1,347 fresh unapproved projects of different ministries and agencies.

The daily also said for the last fiscal year 2020, the government also incorporated a total of 1,287 unapproved projects without fund allocation and feasibility studies. It is being noticed that most unapproved projects remain unimplemented. Besides, the unapproved projects become barrier for approved projects in respect of timely executing.

Under the ADP, this fiscal year, the mega projects are the Rooppur Nuclear Power Plant Project, the Paira Deep Sea Port Project, the Padma Multipurpose Bridge Project, the Metro Rail (MRT Line 6) Project, the Padma Bridge Rail Link Project, Matarbari Ultra Super Critical coal-fired Power Plant Project are among others. Considering current need of economy, these projects need to be executed soon. The Padma multipurpose bridge is expected to bring economic momentum. The bridge would increase the national GDP growth rate by 1.2 percent and the gross product in the southwest region by 35 percent. It will create employment opportunities for 1.2 percent of the total labor force. Poverty reduction (national level) 1.9 percent per year instead of 1.1 percent. For the southwest region, expected reduction rate would be 2 percent per year instead of 1 percent (World Bank Study).

Under these circumstances, unapproved projects might add woe. The need for timely implementing approved projects, which were done feasibility study earlier, is a must. . Data of the Monitoring and Evaluation Division (IMED) of the Ministry of Planning reveals that during the first six months of the current fiscal year, which is from July to December of 2020, only 23.9 percent has been implemented under current ADP. Slow pace of ADP implementation is not new at all. Delay also escalates the cost of projects The trend is being practiced since long.  What is worrying that ADP implementation is lowest in the last five fiscal years.

It is important to note that Bangladesh is set to face many challenges after LDC graduation. The economies under LDC group had been enjoying some 136 different types of international support measures. Once, the country graduated all those measures are expected to lifted. Bnagladesh is likely to lose between 5.5 per cent and 7.5 per cent of its exports because of graduation. Besides, private investment, known as driving force of our economy, was not grown as expected. The aggregate demand in this pandemic time has to be created anyhow. In absence of demand, economy never rebounds. With a view to minimize demand and supply gap, the need for speedy execution the ongoing projects under ADP is needed. The ADP broadly helps to create employment, no doubt.

To conclude, I am proud of our economy. The economy after fifty years of independence has so far gained ability to execute projects under ADP with its own funding. Less dependency on foreign sources in implementing ADP indicates that macroeconomic indicators are in satisfactory level.

Md Mazadul Hoque is analyst of economic affairs. Member-Secretary of Bangladesh Columnists’ Forum