The government approved the Tk263,000 crore annual development program (ADP) for the next fiscal year (FY24) on May 11, with the maximum allocation share for the transportation and communication sector, followed by the energy and power sector.
On June 1 of this year, Finance Minister AHM Mustafa Kamal will present the national budget for the fiscal year 2023–24. The National Economic Council (NEC) authorized a Tk 2.63 trillion Annual Development Programme (ADP) for the next fiscal year (FY24) on Thursday, May 11, 2018, with the largest allocation of Tk 759.45 billion (28.88% of the allocation) going to the transport and communication sector.
The ADP is a section of the national budget that sees the government carry out approximately 2,000 annual development projects to aid in the expansion of the economy.
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Local sources will contribute 1.69 trillion taka (64% of the initial ADP allocation) while foreign sources will contribute 900 billion taka (36%). The ADP of FY24 is 6.88% greater than that of the preceding fiscal year.
Number of projects
In FY24, the Annual Development Programme includes 1,309 new projects, including 1,118 investment projects, 22 survey projects, 80 technical assistance projects, and 89 projects being implemented by autonomous institutions/corporations, according to the available data.
Approximately 1,227 initiatives were carried over from the ADP of the 2022-23 fiscal year to the following fiscal year. In addition, 1,078 projects have been identified as unapproved projects without allocation in the ADP for the fiscal year 2023-2024.
In the next fiscal year, 536 initiatives that will expire in June 2023 have been added to the ADP.
The new ADP allocates Tk11,397.38 crore for “lump sum” allocation by ministry and department, or 4.33 % of the total ADP.
Sector wise allocation shows transportation, energy, power get highest ADP shares
Including the cost of self-financed initiatives, the total size of the ADP is Tk274,674.02 crore. For their initiatives, implementing agencies will spend TK 11,674 crore.
Government funds will cover TK 44,571 crore of the sector’s total expenditures, while foreign loans and assistance will cover the remaining TK 31,373 crore. Road Transport and Highways Division (RTHD) has received the largest share of the transportation and communication sector’s allocations. This department has been allocated TK 34,062 crore.
In contrast, the majority of expenditures in the second highest allocated sector (energy and power) will be funded by development partners. The Power Division receives the largest allocation in this sector, with TK 33,775 crore allocated to this division.
In sector-by-sector allocation, the education sector ranked third with an allocation of 11,36% and Tk29,889 crore from the new ADP.
In contrast, housing and community services received 10.28% of TK 27,046 crore, the fourth highest allocation. Health care ranks fifth on the list as the sector received TK 18,880 crore, or 7.18 percent of the total budget.
Ministry of Railways have been allocated with TK 14,960 crore, and Ministry of Shipping and Bridges Division has been allocated with Tk9,474 crore and Tk9,064 crore respectively.
Under the new ADP, however, at least 20% of the funds will be allocated to ten megaprojects, including the Rooppur nuclear power facility, which is primarily funded by Russia.
Top projects with highest allocations
According to the Planning Commission, the upcoming annual development programme (ADP) has designated Tk60,053 crore, or approximately 23% of the total allocations, for the top few initiatives in the fiscal year 2023-24.
- Nuclear Power Plant in Rooppur: The construction of the nuclear power plant at Rooppur has been given the largest funding for the upcoming fiscal year, totaling Tk9,707 crore.
- Matarbari Ultra Super Critical Coal-Fired Power Project: At Tk8,586 crore, Cox’s Bazar’s power plant under building got the second most money.
- Dhaka-Ashulia Elevated Expressway: Tk5,870 crore were allotted for the project. Once finished, the expressway will link the Nabinagar-Chandra highway’s Dhaka Export Processing Zone (DEPZ) with Abdullahpur, Ashulia, Baipail, and the Hazrat Shahjalal International Airport.
- Padma Bridge Rail Link: Tk5,500 crore will be spent on the 169 km rail route that connects Jashore and Dhaka.
- Expansion of Hazrat Shahjalal International Airport: Tk5,499 crore was allotted for this project to build a third terminal.
- Physical Facilities Development (PFD): The government launched this initiative to build new infrastructure facilities with the goal of delivering crucial population and health services. A total of TK4,696 crore was allotted for this project.
- Dhaka Mass Rapid Transit Development Project (Line-1): The Dhaka metropolis’s mass rapid transit system is designed to reduce traffic congestion and air pollution. It received Tk3,911 crore in funding.
- Construction of the Bangabandhu Sheikh Mujib Railway Bridge: This project for the largest railway bridge in the nation earned Tk3,778 crore.
- Dhaka Mass Rapid Transit Development Project (Line-6): With a budget of Tk3,425 crore, this project received the tenth-highest allocation.
The allocation of funds need proper optimization
The previous fiscal year saw a decrease in government funding for projects from the proposed Tk93,000 crore to Tk74,500 crore, a reduction of 32.73 percent. In the previous year, foreign loans accounted for 33.83% of the total ADP budget. Therefore, despite a decline in foreign exchange reserves, the amount of foreign loans the country holds in the pipeline has increased to about $48 billion as of February this year.
According to Planning Minister MA Mannan, the Prime Minister has instructed to increase the flow of foreign loans and asked to carry out additional projects using foreign funding. In addition, he stated, efforts must be made to improve implementation. The minister made reference to the terms of loans from development partners. A recent visit by the prime minister to the World Bank’s headquarters included a demand for loans with no restrictions.
Satyajit Karmaker, secretary of the planning division sates that the prime minister is analyzing ministries and departments that are unable to use foreign financing. For instance, the capacity to use foreign loans is constrained for the Ministries of Shipping, Health Services, and Primary and Mass Education.
According to economists, it is essential to prioritize effective implementation and make sure that allotted money are used as effectively as possible in order to address this issue. They believed Bangladesh could maximize the effects of foreign loans while ensuring financial stability by improving project management capabilities and streamlining processes.
