Tuesday, 27 September, 2022

Austerity measures: Funds of 717 ADP projects cut

Some 717 projects under the Annual Development Programme (ADP) in the current fiscal year are going to suffer directly from the government’s austerity measures taken to offset the impacts of the Russia-Ukraine war.

The disbursement of funds for 81 ADP projects has fully been stopped while another 636 projects are set to get 75 percent of the allocated funds in FY23 as part of the austerity measures, sources at the Planning Commission said.

The move has put the projects in uncertainty even though those were approved by the Executive Committee of the National Economic Council (ECNEC) on the grounds of their necessity.

In the wake of the Russia-Ukraine war and subsequent sanctions imposed on Moscow by the Western countries that have pushed up the prices of food and fuel across the world, the government has announced austerity measures, including halting fuel oil-based electricity generation and limiting public spending.

At a recent meeting with the line ministries held at the Prime Minister’s Office (PMO), the Planning Commission rearranged the ADP projects of FY23 based on their national importance, timeliness and number of beneficiaries.

 It identified the projects under ‘A’, ‘B’ and ‘C’ categories. The ministries concerned were also informed of the latest decision.

At the outset of the 2022-23 fiscal year, the Ministry of Finance issued a circular informing the Planning Commission of its decision to categorise ADP projects in line with the move to contain public spending at this critical moment.

The circular said no bar will be put on the release of funds for the ‘A’ category projects which are deemed priority schemes, while the medium priority projects would fall into ‘B’ category and 25 percent ADP money for those will not be released this fiscal year.

The ADP money release will be fully suspended for the less priority projects under the ‘C’ category, according to the circular.

The Planning Commission has placed 646 projects under ‘A’ category, 717 under ‘B’ and ‘C’ categories while nine projects have not been classified.

However, it has not interfered in the 85 projects of autonomous public corporations. The commission is now working to assess how much money will be saved after limiting the allocations.

“Problems have been created surrounding some projects with the latest decision of limiting the fund release. Some ministries and divisions have informed the commission of this,” said Mamun-al-Rashid, a member of Programming Division of the commission.

He also said they will try to find out solutions to the problems after discussion with the line ministries.

Important projects like strengthening the ability for fire emergency response, construction of regional passport offices in 16 districts and construction of jail in Narsingdi have fallen into the ‘C’ category.

Three key projects of the National Board of Revenue (NBR), including bond management automation, development of physical infrastructure at LC stations of Hili, Burimari and Banglabandha land ports, also belong to the ‘C’ category.

Distinguished Fellow of the Centre for Policy Dialogue (CPD) Prof Mustafizur Rahman thinks it is a good policy decision given the overall present situation. “There might have been some different opinions about the project classification. But, it’s very important to identify which projects will be stopped now and which will be running,” he said.

The noted economist, however, warned that the project expenditure may shoot up when the projects will resume because the cost of different segments may rise then.

Besides, these schemes’ value addition to the economy will be deferred as well, he added.