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The Financial Express

Planning Commission discourages execution of unimportant projects this fiscal year

| Updated: January 02, 2021 10:37:56


Planning Commission discourages execution of unimportant projects this fiscal year

The government pursued a cautious stance in 2020 while approving development projects and releasing funds amid fears of higher budget deficit due to the adverse impact of Covid-19 pandemic, according to officials and analysts.

They said that comparatively few projects under the Annual Development Programme (ADP) were endorsed in the year that ended on Thursday.

The Planning Commission (PC) had discouraged the government ministries and agencies in taking 'unimportant and less priority projects' due to lower revenue income amid the pandemic, officials said on Wednesday.

They said the Ministry of Finance (MoF) had also taken a cautious approach to releasing funds for the ADP projects to keep budgetary expenditure at a low level in the current fiscal year (FY2020-21) as it issued a notice recently, requesting the ministries to cut their respective development budgets by 25 per cent.

The officials said the PC and the Executive Committee of the National Economic Council (ECNEC) had started giving green signals to fewer projects since March-April this year as compared to last year.

However, the number of projects approved in the first three months (Jan-Mar) of this year was much higher, just before the emergence of coronavirus in the country.

A senior official at the PC told the FE that they approved 8-10 projects, including some larger ones, at each of the ECNEC meetings held between January and March last.

As the virus begun affecting the economy, they started discouraging the project approval and endorsing only 4-5 projects at each of the ECNEC meetings, he added.

According to a compilation by the FE, the ECNEC approved 44 ADP projects in the first three months of the outgoing calendar year at a total cost of Tk 784.87 billion compared to 116 projects of Tk 877.39 billion in the last nine months (April-December).

It also indicated that the government approved an average of 15 projects every month in the first quarter of this year as compared to 13 projects in the last three quarters.

According to the Implementation, Monitoring and Evaluation Division (IMED), the implementation rate of the Tk 2.14 trillion ADP was only 18 per cent in the first five months of FY'21, the lowest in last 10 years.

The FE analysis has found that the project execution rates in the same period over the last nine years were higher than that of the current FY.

During July-November period of FY2021, the government ministries and agencies spent only Tk 384.73 billion, 17.93 per cent of the total ADP outlay, the IMED data showed.

When asked, PC member Md Zakir Hossain Akanda told the FE that they laid emphasis only on those projects which are directly or indirectly linked to the agriculture, rural connectivity, and health services during this Covid period.

"In terms of approval, we have discouraged the unimportant and less priority projects over the months. But we have emphasised on the important and priority projects. We have also given adequate funds for their execution for tackling the impact of Covid and restarting the economy," he added.

"Although some neighbouring countries had reduced their project approval process due to the coronavirus impact, but you see, the government tried to keep its development speed almost similar like it was before the pandemic," Mr Akanda said.

"We are hopeful about recovering from the development challenges that emerged after the Covid outbreak at the end of this FY'21, said the PC member.

Joint secretary of the MoF Sirajun Noor Chowdhury told the FE that they requested the ministries to put on hold some 25 per cent of their fund allocations from the development budget and release the remaining 75 per cent against different development projects.

"You know the budget revision work has already started. After getting realistic demands from the ministries both for development and non-development expenditures, we will release the remaining fund," he added.

"I hope the government would release necessary fund for the development works in the upcoming months due to the restart of the economic activities," Khondoker Ahsan Hossain, a chief of the PC, told the FE.

The World Bank's former lead economist Dr Zahid Hussain said the reduction of budget allocation for the less important ADP projects could somehow bode well for the public expenditure while ensuring development quality.

General Economic Division (GED) member Professor Shamsul Alam said that although the government has taken a high growth target in the 8th five-year plan (FYP), the small reduction in expenditure against the development projects would not undermine the growth prospect significantly.

"We may not be able to achieve our 8.2 per cent growth target in the FY'21, but the economy would recover soon and the more than 8.0 per cent GDP growth target would be achieved in the coming years," he added.

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