Development spending trails at 30% as govt transition slows projects

Even eight months into the current fiscal year, government agencies have spent barely a third of the annual development budget thanks to administrative inactivity as the interim administration ended its term and a new government assumed office.

In the July-February period of FY2025-26, ministries and divisions used 30.31 percent of their total allocation, according to the Implementation Monitoring and Evaluation Division (IMED).

This is a slight increase from 29.87 percent recorded during the same period last year. In FY24, the implementation rate was higher, at 33.65 percent over the same timeframe.

Despite the marginal rise in implementation rate compared to FY25, actual spending fell.

ADP expenditure in the first eight months of FY26 stood at Tk 63,327 crore, down from Tk 67,553 crore in the corresponding period of FY25.

Development spending hit a historic low in FY25, with only 68 percent of the revised ADP implemented, the weakest performance since FY1976-77.

Planning ministry officials said last year’s disruption followed the fall of the Awami League government in a mass uprising, which prompted many project directors to abandon their posts.

The revised ADP for the current fiscal year totals Tk 208,935 crore.

On foreign loans, government agencies spent Tk 24,915 crore, or 34.6 percent of the total allocation, slightly up from 33.92 percent a year earlier.

In absolute terms, however, spending fell from Tk 27,471 crore in the same period last year.

Economists say the slow implementation reflects both administrative inertia and broader political uncertainty throughout much of the fiscal year.

“The eight-month data reflects the period under the interim government, when public engagement was relatively low,” said Prof Lutfor Rahman, an economics teacher at Jahangirnagar University. “As a result, there was less inclination to spend on development projects.”

He added that uncertainty within the bureaucracy further slowed decision-making and execution.

“At the policy level, particularly within the Secretariat, there was a sense of hesitation. Top administrative officials were not as active as usual in driving these projects,” he said.

According to Rahman, the weak implementation has wider economic and social consequences, as ADP spending is closely linked to employment.

“ADP projects are essentially development initiatives beyond routine government work, aimed at public welfare. When implementation slows, it directly affects daily wage earners who depend on such work,” he said.

While the return of a political government may boost momentum, Rahman said the remaining months offer limited scope for recovery. “With only four months left, and the monsoon season approaching, it is difficult to be optimistic,” he said.

He also pointed to the visible deterioration of rural infrastructure due to delays. “Rural roads and other infrastructure have suffered significantly, as regular maintenance has not taken place,” he said.

Rahman expects a slight improvement by the fiscal year’s end. “At best, overall implementation may reach around 75 percent, but full execution of the ADP is unlikely,” he said.

Last week, Monzur Hossain, member (secretary) of the General Economics Division (GED) of the Planning Commission, said foreign loan disbursement is directly tied to project progress. “When implementation slows, disbursement inevitably falls,” he said.

Hossain pointed to structural bottlenecks, particularly in investment projects.

“Many projects involve complex conditions, and meeting those requirements takes time. Land acquisition remains a major challenge in many cases,” he said.

“Now, with a political government in place, monitoring has increased, projects are being prioritised, and delays are being scrutinised more closely,” he added.