ADP: Strategic project cuts to tame expenditure
Following the political transition in August, Bangladesh’s development landscape has shifted dramatically. The interim government has scaled back or dropped numerous projects, citing the need to curb unnecessary expenditures.
Despite these measures, economists remain optimistic, asserting that the economy can maintain positive momentum if resources are managed effectively.
The total allocation for the Annual Development Program (ADP) in the 2024-25 fiscal year stands at Tk 2,78,288 crore. However, only 12.29% of this, or Tk 34,214 crore, was utilized in the first five months. Some ministries, including Health and Foreign Affairs, failed to spend any funds, and ten others reported expenditure below 5%.
This sluggish pace has raised concerns about whether the remaining Tk 2,44,074 crore can be spent effectively in the remaining seven months. A shortfall in financing from ADP, including Tk 20,000 crore in foreign debt, is estimated at Tk 50,000 crore, according to the Ministry of Planning and Economic Relations Division.
Economists call for targeted spending
Many experts see an opportunity in scaling back the ADP. Professor Dr Mostafizur Rahman of the Centre for Policy Dialogue highlights that many "unnecessary projects" in previous ADPs served limited purposes while draining resources. “Even if the number of projects decreases, quality implementation of the remaining projects can sustain economic growth,” he said.
Dr Rahman emphasized the importance of focusing on governance and prioritizing high-impact, people-friendly projects. “Reducing waste and corruption is critical,” he added, pointing out that Bangladesh's low revenue collection and high inflation make cost-saving measures essential.
Dr Mustafa K Mujeri echoed this sentiment, cautioning against reckless expenditure in the latter half of the fiscal year. “Priority projects implemented efficiently will sustain the economy and foster growth,” he noted, adding that resource constraints necessitate strategic cuts.
Re-evaluating major projects
The interim government has identified 13 major projects, with a combined budget of Tk 52,648 crore, for re-evaluation. These include four ongoing projects and nine new proposals. Projects deemed non-essential or unlikely to yield substantial benefits may be revised or cancelled.
An example is the cancellation of the Tk 364.11 crore “Bangabandhu Sheikh Mujib Safari Park, Moulvibazar (Phase I)” project. The decision prioritized biodiversity conservation over development in the Lathitila forest.
Planning Adviser Dr Wahid Uddin Mahmud explained that the focus is now on projects with high economic importance. “We aim to revise the ADP to keep the budget deficit manageable, redirecting savings to sectors that enhance employment and public welfare,” he said.
Balancing development with fiscal discipline
Currently, Bangladesh’s ADP includes 1,352 ongoing projects. The interim government plans to retain those with significant economic benefits while shelving non-essential ventures. Economists agree that prioritizing impactful projects over a broad spectrum of undertakings will safeguard growth and stability.
Inflationary pressures and a deficit in revenue collection remain challenges. However, targeted investments in employment-generating initiatives and essential sectors are expected to keep the economy on track.
A positive outlook
Despite reduced development expenditure, the government’s strategic approach to cutting wasteful spending while focusing on impactful projects is seen as a pragmatic move. Economists believe that careful governance, coupled with efforts to address inflation and revenue deficits, can help sustain economic growth.
“The size of the development budget may shrink, but the focus on employment and people-centric projects will ensure long-term benefits,” said Dr Mahmud.
Bangladesh’s economy, though under pressure, is proving its resilience by navigating these challenges with strategic realignment and fiscal discipline.