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Bank & Finance - February 1, 2023

Fund crisis hits ADP implementation rate

Zarif Mahmud: The implementation of the Annual Development Program (ADP) for the current financial year (2022-23) is showing slow pace. The ADP implementation rate in the first six months of the fiscal year is only 23 percent. Such low ADP implementation in the first six months of the financial year has not been seen in the past few years. Economists believe that the implementation of ADP has been slow due to lack of funds due to the ongoing economic crisis.
They say that in the current critical situation in the global context, it is better not to spend new money on development activities. However, the money that is available as project aid should be used properly. Also, the money received as project aid should be used quickly.
Meanwhile, according to sources from the Ministry of Finance, a kind of pressure has been created in the economy in the global context. There is a crisis in the dollar. All things considered, less importance is being given to the implementation of less important development activities. Due to this, the implementation of ADP is slow. However, it has been urged to accelerate the implementation of ADP projects under the Financial Institutions Department of the Ministry of Finance.
According to sources, the total allocation for ADP in the fiscal year 2022-23 is Tk 2 lakh 56 thousand 3 crore 27 lakh. Out of this GOB (Government fund) is Tk 1 lakh 60 thousand 170 crore 11 lakh. Project assistance Tk 95 thousand 833 crore 16 lakh.
The ADP implementation rate in the first six months of the fiscal year i.e. till December 2022 is 23.09 percent. In the first six months of the previous financial year (2021-22), this rate was 24.06 percent. Earlier, the ADP implementation rate in the first six months of FY 2020-21 was 24.99 percent.
In addition, ADP implementation was 26.59 percent in the first six months of the fiscal year 2019-20, 27.45 percent in the fiscal year 2018-19 and 27.02 percent in the first six months of the fiscal year 2017-18.
Regarding the slow implementation of ADP this time, the Executive Director of Policy Research Institute (PRI), economist Ahsan H. Mansoor told that the government has no fund this year. The government should ultimately revise the ADP. The project must be reduced.
This year there will be various pressures on the economy, it was predicted earlier. Still, when asked whether the implementation rate of the projects taken under ADP is satisfactory or not, this economist said, it is better not to implement it this year. Because there is no money. I think it is better not to implement than to print money. Less is better. Only the implementation of foreign fund projects should be increased.
A responsible official of the Ministry of Finance said that due to the global situation, the implementation of ADP is slow this year. In the meantime, the government has taken initiatives to reduce various expenses. A policy or procedure has been laid down by the Ministry of Finance on how to prepare the revised budget estimate for the financial year 2022-23. There are several costs that have been stopped.
Besides, a directive was also given to formulate the Revised Annual Development Program (RADP) for the fiscal year 2022-23 in the middle of last December. There, considering the resource constraints, the revised ADP has asked to give special importance to completion of ongoing projects rather than taking up new projects. Along with this, it has been asked to reduce the allocation from slow projects or sick projects and give necessary allocations to fast-paced projects, said the official.
He said that in the financial year 2022-23, there are three projects included in ADP under the Financial Institutions Department. The amount of money allocated under these projects is Tk 398 crore 90 lakhs. Out of this, Tk 48 crore 48 lakh from GOB. Project assistance Tk 350 crore 42 lakh. The contribution of the financial institutions sector to the national ADP is 15 percent.
Till December 2022, the Financial Institutions Department has spent Tk 122.98 million on ADP including self-financing schemes, which is 30.70 percent of the allocated amount. Out of the money spent, GOB is Tk 94 lakh 20 thousand. Project aid Tk 121 crore 55 lakh 60 thousand.
On the other hand, Tk 175 crore 49 lakh has been released till December 2022 in favor of the allocation received in ADP, which is 44 percent compared to ADP allocation. Out of this, GOB’s share is Tk 35 crore 41 lakh, which is 73.04 percent of the allocation. Project assistance is Tk 140 crore, which is 40 percent of the allocation.
According to the relevant sources of the Ministry of Finance, a review meeting was held this month under the chairmanship of Financial Institutions Department Secretary Sheikh Mohammad Salim Ullah on the implementation progress of the ADP projects being implemented by various organizations and authorities under the Financial Institutions Department. It was informed there that there are three projects included in ADP under the Financial Institutions Department. Among them one investment, one technical and one self-financing project.
These include safety reform and environmental improvement technical assistance projects for the garment industry (RMG) in Bangladesh. ADP allocation of Tk 22 crore 66 lakh for this project in the financial year 2022-23. A full part of which is project aid. ADP implementation progress till December 2022 is Tk 3 crore 80 lakh 60 thousand or 16.79 percent.
Director of this project Bangladesh Bank General Manager Moni Shankar Kundu said that the proposal to extend the duration of ADP and non-ADP parts of the project is under process. The cost of the ADP segment depends on the progress of the non-ADP segment. Due to the outbreak of coronavirus, the non-ADP portion of the project has not been able to release funds as per the target, the progress of the ADP portion has slowed down. Development partners have agreed to extend the non-ADP portion of the project to December 2024.
Another project under the Financial Institutions Department is ‘Bangladesh Insurance Sector Development Project’. ADP allocation for this project in the current financial year is Tk 341 crore 76 lakh. Out of this, GOB is Tk 14 crore and project aid is Tk 327 crore 76 lakh. Implementation progress till December 2022 is Tk 118 crore 68 lakh or 34.72 percent. Out of this, GOB is Tk 93 lakhs and project aid is Tk 117 crore 75 lakhs.
Director of this project in the review meeting held on the implementation progress of the ADP project. Kamruzzaman said that the procurement activities of all the packages of the construction and consulting sector under the project are being carried out smoothly. In view of this, the meeting directed to expedite the purchase process of all the packages under the scope of the project. Along with this, package wise progress and cost statement is asked to be presented in the next meeting.
Another project under ADP under Financial Institutions Department is ‘Construction of Investment Corporation of Bangladesh (ICB) Building’. ADP allocation for this project in the current financial year is Tk 34 crore 48 lakh. ADP implementation progress till December 2022 is Tk 1 lakh 20 thousand or 0.3 percent.
The director of this project is AGM of ICB Arifur Rahman said that the structural design of the project titled construction of 40-storey building with four basements of ICB has been changed. That way the building will have 32 floors with four basements. Accordingly, the design has been finalized from Buet.
About making 32 floors instead of 40 floors, the managing director (MD) of the institution Abul Hossain told, taking into account the security issue, it has been decided to make the building 32 floors instead of 40 floors as per the recommendation of BUET.
He said, first it is planned to do it with our own funding. Now we will do it with PWD (Public Works Department). Because we don’t have such experts. We have received the approval of the Ministry in this regard. Hopefully, the project will be completed within the stipulated period. It won’t take long to get started.

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