A deep cut in the current national development budget by Tk 500 billion is likely under a belt-tightening stance taken by the post-uprising government to make two ends meet.
Officials said Thursday a substantial sum of funds of the Annual Development Programme (ADP) could be cut from the local-resources part of the outlay rather than reduction in the external funds or project aid.
Ministry of Finance (MoF) and Planning Commission (PC) officials said the ADP outlay might shed Tk 500 billion to count down to Tk 2.15 trillion from the original size of Tk 2.65 trillion in the budget-trimming process.
Meanwhile, the Economic Relations Division (ERD) completed its consultations with all the ministries and divisions for revising the foreign-aid part of the current ADP for the fiscal year (FY) 2024-25.
In the Tk 2.65 trillion outlay, a total of Tk 1.65 trillion was allocated from government’s domestic resources while Tk 1.0 trillion from external resources.
The PC and ERD have already started work to revise down the ADP, as the exchequer is under strains of fund crunch following past extravagance, sources said.
“We have completed consultations with all the ministries and divisions over the last four days. Most of the ministries were cautious in their spending,” a senior ERD official told the FE writer.
Many of the big projects may see their fund allocations cut down as the government has taken cautious stance on financial matters, he said.
In the last FY, the National Economic Council (NEC) downsized the overall ADP allocation to Tk 2.45 trillion, cutting out Tk 180 billion or 6.84 per cent from the original Tk 2.63 trillion.
The NEC in the previous FY2023 revised ADP by 7.72 per cent to Tk 2.27 trillion from its original outlay of Tk 2.46 trillion.
A senior MoF official says since Bangladesh’s economy is facing crisis, the government wants to cut much of the budget for development works.
The funds to be slashed from the development budget are likely to be diverted to the power sector in a bid to pay the dues to the local private and foreign electricity-generation companies.
The government owes a substantial sum to the companies as outstanding and other charges for purchasing power.
The ERD official said they would now scrutinize the revised project-aid (foreign fund) requirements from the ministries and divisions, and then draft a revised budget.
“We would finalise it from our side and will be sent to the PC for finalising the RADP for the current fiscal,” he added.
A senior PC official told the FE: “We’ve already sought revised proposals from all the ministries and divisions on their respective development budgets. After getting all the proposals, we will draft an RADP for the current FY2025 within early next month.”
“Then we will place the RADP before the extended committee meeting of the PC for getting approval by February. If the extended committee approves, we will place it before the NEC for approval,” he added.
Under the ADP, a part of the national budget, nearly 1300 development projects have been undertaken for implementation in the current FY2025 to facilitate the country’s economic growth. Another PC official has said since the project-execution performances of the ministries and their agencies are still poor, “we are forced to cut the original ADP for streamlining its implementation”.
According to the IMED, the ADP implementation during first four months (July-Oct) of the current fiscal year lost steam to sink to only 7.90 per cent–3.64-percentage-point lower than that in the last FY2024.
Some key public agencies had trailed far off the their implement targets in project works, resulting in a paltry execution rate, the Implementation Monitoring and Evaluation Division (IMED) official said.