Seven months into FY, project priority list found not working

A preliminary decision has been made to go back to the drawing board with development projects in the seventh month of the current fiscal year, as it seems the first project line-ups were not effective, according to planning officials, raising flags about the outcomes of the belt-tightening in development spending since July last year.

Furthermore, a proposed Tk15,000 crore deep cut in the revised annual development scheme by foreign funding is also causing headaches for the country's strained forex reserve, prompting the planning minister to speak out against it at an assessment meeting on Tuesday.

With the meeting with 43 ministries and divisions, Planning Minister MA Mannan advocated for more spending from foreign development funds as it will give a boost to the foreign currency reserve by 30%.

The proposal to relabel development projects into A, B and C categories as per their priorities is still at the primary stage. It will be finalised after the government high-ups give the go-ahead, State Minister for Planning Shamsul Alam told The Business Standard.

If finalised, the project rearranging in terms of money flow will be effective in the revised Annual Development Programme (ADP). Planning officials said the Planning Commission, Finance Division and related ministries or divisions will determine the priority list – unlike the first one set by the Prime Minister's Office in July 2022.

Shamsul Alam too believes the project priority list should come from ministries and divisions as they understand better which projects are important and need to be funded immediately.

"The Finance Division and the Planning Commission will just be assisting the ministries and divisions in the list-making process," he added.

According to officials, money is pouring into many non-essential projects labelled as A category in the current list. Vice versa, some projects are not getting enough funding despite being important – deterring the government from reaping the benefits of the belt-tightening.

The government adopted the austerity measure last year amid the Russia-Ukraine war, forecasts of a global recession and half-patched Covid recovery. The goal was to control inflation, sound management of foreign exchange reserves and ensure energy and food security.

On 3 July last year, the Finance Division issued a notification marking projects into A, B and C categories.  The allocation for the A category development projects was kept unchanged as the B category projects saw a 25% cut in government funding.  And funding for the C category projects was suspended.

All the foreign funded projects were placed in the A category. Funding for some 636 B category projects was trimmed, according to the Finance Division notification, as the government stopped the money flow to 81 projects listed with the C category.

Now Planning Commission officials say there were a number of flaws in the priority list by the Prime Minister's Office. There are many projects in the A category that have already been completed. Besides, many projects appeared in the list multiple times.

They argued for the new project line-up to correct the "mistakes" and to fund projects that got approved in the last six months.

Negligence?

Bangabandhu Safari Park, Gazipur approach road widening and infrastructure development project (3rd revised) has been included twice in the A category, shows priority list by the PMO.

Similarly, the Sheikh Russel Aviary & Eco-Park in Chattogram's Rangunia has been included in the B category twice.

Despite being completed, a Tk128 crore regional passport office project is in both B and C category.

The Tk8.90 lakh crore Dhaka underground metro rail project – an ambitious transport scheme by the Bridges Division – made its way to the A category, while the money flow to seven land digitisation projects under the land ministry totalling to Tk4,799 crore stopped.

Besides, there are a number of projects that got the spending ceiling upped after being listed with B or C category. After the July labelling, the projects wrote to the PMO seeking a spike in spending from the government fund.

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), said it is very disappointing that the authorities could not finalise the priority projects though the first seven months of the fiscal year have gone.

"If the vetting isn't finished yet, when will the projects be completed," she questioned.

The economist also said that people were told the priority list was to push forward crucial initiatives while cutting out unnecessary ones amid the economic crisis.

"Any flaw in this list is a clear indication of negligence in the overall development process," she told The Business Standard.

At the meeting with the planning minister on Tuesday, officials proposed trimming the foreign funded development allocation by Tk15,000 crore thanks to a lack of implementation capacity.

The spending target from the foreign fund was Tk93,000 crore, which was proposed to be lowered at Tk78,000 crore.

The minister asked the ministries and divisions to spend more from the foreign development funding, taking some pressure off the ailing forex reserve.