ADP spending hits 49-year low

Bangladesh's development spending fell to a historic low in the recently concluded fiscal year 2024-25, with just 68 percent of the revised annual development programme (ADP) implemented—marking the weakest performance since FY1976-77.

According to Implementation Monitoring and Evaluation Division (IMED) data, ministries and divisions spent only Tk 1,53,452 crore out of Tk 2,26,165 crore of the revised allocation.

The interim government in March slashed the original allocation by 18 percent from Tk 2,78,288 crore amid the slow pace of implementation for a host of factors, including political and social unrest during the July uprising and the subsequent fall of the Sheikh Hasina regime, and low collection of revenue.

Overall implementation of development programmes, as reflected in spending, was 55 percent of the original outlay.

Officials and economists also attribute the drastic shortfall to heightened scrutiny over politically sensitive projects and austerity measures taken by the interim government in a bid to curb inflation, reduce bank borrowing, and restore macroeconomic stability.

Yet, the final figure of the implementation caught some economists by surprise.

"Obviously, it is frustrating," said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD). "There was an extraordinary situation in the first half of the fiscal year. This affected implementation."

He noted that the low development spending does not affect only the public sector but also the private sector. "This has also put a negative impact on economic growth."

Previously, the lowest ADP implementation rate was recorded in FY2019-20 during the onset of the COVID-19 pandemic, when execution stood at 80 percent.

The IMED says the Health Education and Family Welfare Division spent the lowest at 15.36 percent, followed by the Health Services Division at 22 percent of its allocated funds under the revised plan.

In stark contrast, the Power Division and the Energy and Mineral Resources Division 

emerged as top performers, implementing 98 percent of the revised allocation.

Rahman said the interim government slashed several projects to cut costs, which contributed to the low implementation rates in some sectors.

"Even after that, reduced development spending on education and health is discouraging for public service delivery," he said.

Zahid Hussain, former lead economist of the World Bank's Dhaka office, said the sluggish ADP implementation in the first half of FY2024-25 stemmed from administrative delays, lack of project scrutiny, and revenue shortfalls.

"Almost no work was possible in July and August," he said, attributing the slowdown to the time the new administration needed to reorganise and resume basic functions. "Even maintaining routine operations was a major challenge in the first six months."

"The government pledged to go slow on mega projects and reassess smaller, politically driven ones—but the vetting process itself delayed implementation."

Amid low revenue collection, the government also reduced its borrowing plan from banks in its bid to contain persistent inflation.

Pointing out the stark difference in spending rates between divisions, he said, "This disparity points to deeper structural and administrative inefficiencies."

He noted longstanding issues in procurement and bureaucratic capacity, especially in health and education, where implementation has remained persistently weak.

Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem), said the turbulent period following the mass uprising in July 2024 was a major reason for low ADP implementation.

"Political transition delayed administrative reorganisation. Political caution and efforts to avoid past corruption allegations further slowed implementation."

Raihan said bureaucrats were reluctant to proceed with projects linked to the previous regime, fearing controversy. "Without a clear mandate or long-term vision, the interim government lacked the political drive to push development work forward."

He criticised the government's failure to prioritise core sectors amid an ongoing economic crisis. "It was critical to push health and education projects. Yet only 21 percent of the Health Services Division's allocation was utilised—this is alarming."

He also emphasised gaps in implementation capacity.

"Many politically backed contractors became inactive after the regime change, and the government lacked mechanisms to replace them. The bureaucracy was unprepared to respond."

When contacted, Kamal Uddin, secretary of the Implementation Monitoring and Evaluation Division, declined to comment on the ADP implementation rate, saying he took charge of the division recently.