The Planning Commission has initially decided the size of the revised Annual Development Programme (ADP) for the current fiscal year by reducing the allocation by 7.51%, or Tk18,500 crore.
According to commission officials, as always the allocation of government funds is not being cut this time. Only foreign aid allocations have been slashed.
As a result, the ADP has been revised down to Tk2,27,566 crore from its original outlay of Tk2,46,066 crore.
On Monday, an extended meeting of the commission chaired by State Minister for Planning Shamsul Alam initially approved the revised ADP. But the size will be finalised in the National Economic Council (NEC) meeting scheduled to be held early next month with Prime Minister Sheikh Hasina in the chair.
Officials said that although the allocation of government funds has not been changed in the revised ADP, demand for government funds has decreased for the first time.
Ministries and departments used to seek Tk20,000 to Tk30,000 crore more than the allocation of government funds in the original ADP in other fiscal years. But in the current financial year, the ministries and departments have submitted demands pertaining to about Tk4,000 crore less than the ADP allocation, they added.
The allocation of government funds in the original ADP for the current financial year was Tk1,53,066 crore.
Officials said that the demand for the allocation of government funds this year has decreased mainly due to two reasons. One of these is the government's cost-cutting policy. The government has partially or completely stopped the release of funds for various development projects after segmenting them into ABC categories. For example, it has been decided not to spend any money on C-category projects. Again, 25% of the allocation cannot be spent in the B category.
Besides, in the face of an increase in the price of construction materials, contractors are slowing down or stopping work on many projects. This is also the reason that the demand for government funds among the ministries and departments is on the decline.
Although the demand is low, however, the Finance Division favours keeping the allocation of government funds in the revised ADP unchanged, according to officials of the Planning Commission.
Accordingly, some ministries and departments have been allotted more than their requirements. For example, the Local Government Division had a demand for Tk13,178 crore from the government fund, but Tk14,000 crore has been allocated for it in the revised ADP.
Foreign aid allocation revised down by Tk18,500 crore
As implementation capacity has not improved, foreign aid allocation is being slashed by Tk18,500 crore to Tk74,500 crore in the current financial year, according to ERD sources.
Earlier in December last year, the ERD held a series of meetings with all the ministries and departments where the project implementing agencies proposed a foreign aid allocation of Tk78,000 crore in the revised ADP. Recently, ministries and departments have proposed cutting the allocation by another Tk3,500 crore.