ADP spending improves a bit
Monday, August 1, 2011
The implementation of annual development programme (ADP) was better last fiscal year, rising by 27 percent compared to the previous year.
The government took an ambitious ADP last fiscal year and after a downward revision, 92 percent of the revised programme could be implemented finally.
In fiscal 2009-10, the implementation rate was 91 percent of the revised ADP.
The implementation of foreign aided projects went up by only 1.6 percent but local funded project implementation rose by 41 percent though its expenditure quality gave rise to questions inside the finance ministry.
Like the previous years, hurried and huge spending marked the last month of the last fiscal year when Tk 6,981 crore was spent against only Tk 836 crore in the first month of the fiscal year.
Economists frequently raise questions about hurried spending at the end of every fiscal year, which makes the expenditure wasteful and also creates liquidity crunch in the banking sector.
Zaid Bakht, research director of Bangladesh Institute of Development Studies, at a discussion on Bangladesh Bank's Monetary Policy Statement (MPS) said, as the ADP implementation gets rapid momentum at the end of the year, the government borrowing suddenly increases much.
Bakht said it creates liquidity crisis in the banks and also pushes up inflation.
Implementation Monitoring & Evaluation Division (IMED) officials said, at the end of a fiscal year, implementing agencies get the ADP allocations released and deposited into their accounts though the amount remains unspent, which results in showing of higher expenditure at the year-end.
About the government borrowing at the year-end, the central bank MPS said, every June government departments and offices rush for full withdrawal of their annual budgetary allocations, often depositing the funds drawn in accounts with scheduled banks.
About a huge increase in local fund utilisation, the finance ministry's budget department officials who oversee implementation by different ministries said it was good but it should be intensely monitored whether quality expenditure was ensured.
The central bank MPS also said, ensuring efficiency and preventing wastefulness in utilisation of the rapidly rising ADP expenditure allocations should be an area of priority attention.
According to an IMED report, last fiscal year ADP worth Tk 32,830 crore was implemented, whereas the revised allocation was Tk 35,880 crore. The original allocation was Tk 38,500 crore.
In fiscal 2009-10, the implementation was Tk 25,917 crore, which was 91 percent of the revised ADP. The local fund expenditure was Tk 23,166 crore or 97 percent of the allocation. The utilisation of project aid was Tk 9,665 crore which was 81 percent of the allocation.
A finance ministry official said, in case of releasing fund the development partners go for more scrutiny.
As the ministries fail to utilise foreign aid money, the amount of unutilised foreign aid in the pipeline is now more than $12 billion.
The finance ministry official also said, as the foreign aid could not be utilised, it was putting pressure on the balance of payments.
According to the IMED report, 10 ministries and divisions got allocation of 83 percent of the total ADP last fiscal year. Among the worst performers, bridge division spent 34 percent, health and family welfare ministry 91 percent, roads and railway division 82 percent and water resources ministry 89 percent.
A large portion of allocations to these ministries/divisions was foreign funded projects. So, their rate of implementation was low.
However, local government division spent 96 percent of the allocation, power division 99 percent, primary and mass education ministry 97 percent, education ministry 95 percent, agriculture ministry 98 percent and energy and mineral resources division spent 92 percent.
http://www.thedailystar.net/newDesign/news-details.php?nid=196651
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