High demand for ADP fund despite poor execution

Hasibul Aman

19 February, 2019 12:00 AM printer

Demand for ADP money is high this year even though the execution of the development plan still remained far below the halfway mark after seven months into the 2018-19 fiscal.

ADP performance saw a modest hike from 33.35 per cent to 34.43 per cent during the July-January period of FY19 as money spending soared to Tk 62,282 crore from Tk 54,718 crore, suggest the latest official data. 

But the Planning Ministry has compiled different ministries’ demand for ADP money at Tk 200,546 crore, which is 11 per cent higher than original ADP allocations of Tk 180,869 crore for the current fiscal year.

The ministry placed the demands at an ADP review meeting held on Sunday between Planning Minister MA Mannan and secretaries of important ministries to find ways how to spur ADP execution, sources said. 

The draft of Revised ADP for FY19, however, will be finalized at an extended meeting of the planning commission which will be placed later at NEC meeting for final approval.

Noted development analyst Dr Zaid Bakht thinks that it might have been a new trend in ADP execution since FY17-18 that RADP size gets larger than original ADP outlay, although ADP would see drastic cuts earlier. 

“Some projects consume much time at a preparatory stage during the first half of a fiscal year, but their implementing agencies may think that they will be able to spend more money in the second half,” Zaid Bakht said.

However, the analyst sees the seven months’ nearly 35 per cent ADP performance as a continuation of historically low ADP implementation rate in the first half and a large pick up in the last quarter.

“In terms of percentage, the seven-month ADP performance shows that there has not been that much improvement in execution. It can be called the continuation of historical performance,” he commented.

But in terms of the absolute amount the performance is not “too much frustrating” as among of spending rose compared to last fiscal year, he added.

He said the last-minute ADP money spending spree creates a scope of wastage of public money and it can not ensure the quality of project work, which is a very important issue.

He informed that usually 40 per cent to 60 per cent of money is spent in the last quarter. He suggested for increasing implementing agencies’ capacity further and ensuring greater project oversight. 

Local money predominantly led to slight improvement in ADP execution this year, while aided project implementation slowed down after posting an impressive performance last year, latest IMED data suggest.

Local money utilisation rate rose from 30.02 per cent or Tk 28,677 crore to 32.41 per cent or Tk 36,624 crore, but project assistance utilization rate fell from 38.63 per cent or Tk 23,336 crore to 37.54 per cent or Tk 22,526 crore.

ERD has already proposed cutting foreign money allocation from the originally planned Tk 60,000 crore to Tk 51,000 crore for RADP, which was even lower than last fiscal’s Tk 52,050 crore final PA allocation.   

This means that the high demand for ADP money might be met mainly from local resources.

There is a criticism among analysts and policymakers that implementing agencies take a greater interest in spending local money compared to foreign money because foreign money spending requires compliance with some terms and conditions. 

Besides, the release of foreign funds sometimes faces delay from the part of development partners because of their bureaucratic tangles, officials at Economic Relations Division (ERD) alleged.

The release of foreign funds reached $6.29 billion in FY18 which grew by 71.39 per cent over $3.67 billion fund release in FY17 mainly thanks to fund release against some large projects.

Last fiscal performance was 99.68 per cent of Economic Relations Division’s revised fund release target of $6,311.

Riding on this success, ERD has set a fund disbursement target of $7,172 million for the current 2018-19 fiscal year as well, which so far seems to be ambitious.

During the first seven months, 15 large ministries or divisions that fetched nearly 80 per cent ADP money managed to post 37.39 per cent overall ADP performance.

Energy and mineral resources division came top with 62.25 per cent execution rate, followed by 59.38 per cent posting by science and technology ministry, 52.74 per cent by power division and 39.31 per cent by local government division.

Other important agencies like road transport and highways division could post 25.57 per cent, bridges division 23.45 per cent, railways ministry only 11.91 per cent and health services division 27.91 per cent.

Four implementing agencies were yet to reach double-digit execution rate even after seven months have elapsed in FY 2018-19.