In order to deal with the fallouts of Covid-19 and an imminent global recession, the government has decided to curb public spending by not approving new ADP projects, except those in agriculture and health, in the upcoming budget.
Of all the running projects, only projects in these two sectors will get top priority for new funds in the 2020-21 fiscal year, Planning Minister MA Mannan and Planning Division Secretary Nurul Amin confirmed.
However, any inevitable project from any sector might be considered for approval, Secretary Nurul Amin told The Business Standard.
Planning Commission officials said new allocations for ongoing projects will be based on one point: minimising funds for Annual Development Project (ADP) along with tackling the possible economic recession.
Instructions on ADP formulation for the upcoming fiscal year have already been sent to all ministries and departments.
However, the current mega projects should be continued by giving necessary allocations to avoid impact on employment. Also, government investments help in raising private investments, the officials said.
Planning Minister MA Mannan said some running projects should be stopped right away. "But before doing that, we should form a committee to identify the non-essential projects which may be delayed."
Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD) – a private research organisation, said health is the most neglected sector of the country with less than 1 percent allocation of the gross domestic product (GDP).
"The coronavirus pandemic has opened our eyes about such a poor allocation as well as all the mismanagement in the sector," she said.
The scenario for agriculture is similar, she said, adding, "We should increase agricultural production as it may be harshly hit by the pandemic."
Farmers should get enough incentives for that purpose. Or else, they will lose interest in production, Fahmida further said.
For all these reasons, the two sectors should be prioritised while approving fresh projects as well as allocating new funds, she added.
Concerned officials said the number of projects keeps increasing in the ADP, causing the funds for all projects to drop continuously.
They added that every year, some projects are kept alive on nominal allocations. A shortage in necessary funds over the years has been causing these projects to lag behind and consume more money, resulting ultimately in wastage of government funds.
Over the past few years, the Planning Commission has not been able to stop approval of a flurry of new but unimportant projects, thanks to vicious political pressure and an influential bureaucracy.
These irrelevant projects are eating up money and shrinking funds for essential projects. Against this backdrop, the government issued a circular at the beginning of the current fiscal year to choose new priority projects.
The ADP in the 2019-20 financial year initially incorporated 1,475 projects. The number increased in the revised ADP by around 400 to stand at 1,846. Meanwhile, more than 950 additional projects are also awaiting government approval.
The revised ADP has an allocation of Tk192,921 crore. But, its total size, including the allocation for autonomous projects, stands at more than Tk201,198 crore.
Prime Minister Sheikh Hasina has already unveiled a set of financial support packages of Tk95,619 crore to shield the economy from the impacts of the coronavirus pandemic.
Poor people, including farmers, health workers and day-labourers, who have lost income already, will get a good percentage of the incentives.
The government is primarily focusing on saving lives. As a result, it needs fund assistance from both domestic and foreign sources to save the poor.
But, revenue earnings in the first seven months of the current fiscal year suffered a shortfall of over Tk39,500 crore, according to the National Board of Revenue.
At the same time, the government also surpassed the target of bank borrowing (Tk47,363 crore) halfway into the 2019-20 fiscal year.
Economists, therefore, think that all these issues have created a big challenge for the government to raise funds to face the coronavirus pandemic.
As a result, the government has already taken steps to collect surplus funds from different organisations. Simultaneously, it has also decided to minimise ADP funds to spend it to fight the pandemic.