Published in The Financial Express on Friday, 20 March 2015.
Implementation of ADP
Jafar Ahmed Chowdhury
Amidst concerns about the performance of the economy due to ongoing blockade and shutdowns, the planning Minister told recently that prevailing political unrest was not affecting the implementation of annual development programme (ADP). An amount of Tk. 3.89 billion was used up during July- February of the current fiscal year which is 38 per cent of the total ADP outlay. Incidentally, during the same period of last fiscal year the spending was also 38 per cent of the total ADP outlay. It was further revealed that spending increased by 50 per cent in February from that of January 2015. While Tk. 33,640 million was spent in January, Tk. 50,400 million was used up in February 2015.
Meanwhile, the economy has been bleeding due to political unrest. All concerned, whether national or international bodies, have been constantly expressing worries about the performance of Bangladesh economy. The Federation of Bangladesh Chamber of Commerce and Industries (FBCCI) and other trade bodies have claimed that the economy has been losing Tk. 27 billion to Tk. 30 billion a day due to political turmoil in the country. The Centre for Policy Dialogue (CPD) and other research organisations, economists and columnists have expressed apprehension about realisation of 7.3 per cent GDP (gross domestic product) growth during FY 2014-15. Even the finance minister announced the downsizing of the growth target. The World Bank and the Asian Development Bank (ADB) also expressed such concern. Very recently, the International Monetary Fund (IMF) has categorically said that every sector of Bangladesh economy has been affected by the ongoing political unrest. That led to the conclusion that economy would not be able to achieve more that 6.1 per cent GDP growth. Every conscious citizen of the country is observing how economic activities are being affected by the prevailing unrest. Against this backdrop, it is really amazing that development spending soared despite ongoing political unrest.
The government adopted national budget of Tk. 2500 billion for FY 2014-15 of which Tk. 803 billion was allocated for ADP. In the ADP, 65.51 per cent of the outlay was local currency and 34.49 per cent was project aid. The ADP had 1034 projects (excluding self-financed projects of autonomous bodies) of which 874 were investment projects, 134 were technical assistance projects (TAP) and 21 were Japanese Debt Cancellation Fund (JDCF)-financed projects. Besides, there was a list of unapproved/unallocated 684 projects.
This ADP was been revised in the meeting of the National Economic Council (NEC) held on March 10, 2015. The size of financial outlay has been slightly reduced by Tk. 50 billion only. The revised outlay is now Tk. 750 billion. The nomenclature of the revised annual development programme (RADP) has not been changed. As usual, the transport sector has received the highest allocation (23.67 per cent of ADP) followed by education and religion sector (12.03 per cent), electricity (11.01 per cent), rural development and rural institutions sector (9.70 per cent), physical infrastructure, water supply and housing sector (9.50 per cent), science, information & communication sector (6.43 per cent) and agriculture sector (only 5.77 per cent). The striking feature is that the lowest allocation has gone to agriculture sector. The contrast in Bangladesh economy is that rice is exported on the one hand and imported, on the other, which creates doubts about the claim of self-sufficiency in food.
Now the RABP 2014-15 contains 1204 approved projects with allocation. There are 1014 investment projects, 196 technical assistance projects and 21 JDCF-financed projects. Thus the number of projects has gone up, from 1034 to 1204, while the total outlay has decreased from Tk. 803 billion to Tk. 750 billion. Moreover, in order to facilitate the receipt of foreign aid, a list of 356 projects has been included in the RADP in addition to a list of unapproved and unallocated 605 projects. The condition of proposed public-private partnership projects is deplorable. While there was a list of 40 such projects in the original ADP, the number fell to 18 with no project undertaken.
Mathematically, the amount of money for ADP implementation increased in February than what it was in January 2015. This does not reflect physical progress of implementation. When one looks at the overall implementation of projects under the annual development programme one can not feel comfort with it. Take the example of the list of projects which were supposed to be completed by June 30, 2015. In the original ADP, 324 projects were earmarked for completion. Among these, 284 were investment projects, 30 were technical assistance projects and 10 were JDCF-financed projects. Now, the RADP shortened the list showing only 280 projects for completion. Among these, 241 are investment projects, 28 technical assistance projects and 11 are JDCF-financed projects. The shortening of numbers in the list implies inability of the project authorities on the one hand and reallocation to other projects, on the other. Again, there are many projects in the ADP which do not have adequate allocation. For example, according to IMED (Implementation Monitoring and Evaluation Division) of the planning Ministry, there were 180 projects in the ADP of 2013-14 which had zero financial and zero physical progress. Out of these, 52 projects had allocation of Tk. 100 thousand (one lakh) each. It is found that 92 projects having allocation of Tk. 568 million spent Tk. 218 million without any physical progress. Thus financial progress and physical progress do not always coincide.
One may have an idea of the implementation of the projects when one looks at the ADP of 2013-14 for which the official report is available. There were 1366 projects in the RADP of 2013-14 with an outlay of Tk. 600 billion. The report showed 95 per cent utilisation of total allocation. However, all sectors of the economy could not achieve 95 per cent financial progress. The report found 12 ministries/divisions achieving less than 80 per cent financial progress. It observed further that eight ministriesdivisions could not achieve satisfactory progress over last three consecutive years. There are some other interesting observations. Seventy-one projects do not have satisfactory physical progress and 49 projects could not show any visible progress. It is also reported that 290 projects were set for completion during 2013-14, but 151 projects were declared complete. Beyond this list, however, 82 projects were declared complete. Taken together, the number of projects completed is 233. Among these projects, IMED observes that 181 projects were declared “complete” without actual completion. Among 233 completed projects (declared), 189 projects were found time over-run and 86 projects were found cost over-run. Planned average implementation period of the completed projects was 2.89 years but it took an average implementation period of 5.04 years.
All this suggests that simple financial progress of ADP implementation is not an issue to boast on. While 38 per cent of the ADP outlay was used during first eight months of the fiscal year, further 57 per cent progress should be achieved within rest four months ending on June 30, 2015 to make it 95 per cent.
The writer is an economist and columnist.
chowdhuryjafar@ymail.com