The estimated ADP size for the next fiscal year that will be placed today at the National Economic Council (NEC) meeting has been set at Tk 26,000 crore. The amount of local resources in it has been set at 57 percent or Tk 14,812 crore while foreign resources will make up about 43 percent or Tk 11,188 crore.

The current fiscal's ADP is also being revised and the allocation has been set at Tk 21,500 crore in which local resources constitute 50.43 percent while foreign resources constitute 49.57 percent.

Meanwhile, the Bangladesh Institute of Development Studies (BIDS) in a policy recommendation report suggested a maximum allocation of Tk 24,000 crore for ADP in the 2006-07 fiscal contradicting the planning ministry proposed allocation of Tk 26,000 crore.

Sources said apart from project aid the government gets foreign aid as budgetary loan, which the government spends in its ADP. Since this is the election year, chances of getting foreign loans are very slim as those loans are usually tagged with different reform conditions.

Within the estimated foreign resources, Tk 863 crore has been estimated as gettable as budgetary support in the next fiscal, which is about 34 percent less than the amount that was received for the current year's revised ADP.

Although there was a policy loan of Tk 350 crore for the current revised ADP, the estimated proposed ADP for the next fiscal does not have any policy loan.

Commodity and food aid are also believed to be 64 percent less in the coming ADP compared to the current fiscal's revised ADP.

Special development support loan of Tk 1380 crore for the current fiscal's ADP remains the same for the next fiscal's ADP too.

Project aid however is likely to increase by 23 percent for the next ADP and is expected to stand at Tk 8,750 crore. Sources said chances are very high that in the end the same percentage of project aid will not be received as the same was the case for the current ADP too. The project aid size had to be downsized by 5 percent in the current ADP and may very well be cut further when the final estimation will be made.

In the current year's original ADP, Tk 1,040 crore had been included as a condition to debt relief provided to the government by Japan, but in the revised ADP it was re-fixed at Tk 406 crore.

In the coming ADP too Tk 1247 crore has been proposed as allocation derived from debt relief provided by Japan but if the current fiscal year's record is anything to go by the real amount will be much less in reality.

CURRENT FISCAL'S REVISED ADP
Allocations for agriculture, education, transport, health, oil, gas and natural resources sectors have been reduced in the revised ADP. While allocations for rural development, power and infrastructure sectors have been raised.

The original ADP size in the current fiscal amounting to Tk 24,500 crore has been cut by Tk 3000 crore bringing it down to Tk 21,500 crore.

In the revised ADP allocation for the agriculture sector has been reduced to Tk 1088 crore, down by Tk 37 crore. Block allocation of Tk 500 crore for agricultural assistance in the original ADP has been dropped altogether in the revised one.

Agriculture ministry sources said the block allocation existed only in the ADP document, it was never handed over to them in reality. They sent letters to the finance ministry on several occasions over the last four months, but to no avail, they said.

Allocations for health, nutrition, population and family welfare have been re-fixed at Tk 2,110 crore, down by Tk 159 crore from the original ADP.

Allocations for education and religious affairs have been cut by Tk 434 crore bringing it down to Tk 2863 crore.

Allocations for oil, gas and natural resources have been cut by Tk 650 crore, bringing it down to Tk 394 crore.

Allocation for the transport sector has been set at Tk 2855 crore, down by Tk 184 crore.

A planning ministry source said these amounts actually have not been cutbacks, rather the respective ministries have not been able to spend them. So the planning ministry has just reallocated the amounts to those ministries that require more than what had been allocated before.

Allocations for rural development and institutions have been raised to Tk 3,056 crore, up by Tk 60 crore. For the power sector Tk 263 crore was raised to make it Tk 3382 crore; for physical planning, water supply and housing sectors an additional Tk 202 crore was allocated bringing it up to Tk 1497 crore.

BIDS SUGGESTS EFFICIENT IMPLEMENTATION AND EVEN SMALLER ADP
BIDS suggested taking up fewer projects in the road sector in the next ADP to ensure quality and timely implementation of those projects.

Last week it sent a 'Policy Recommendations for National Budget 2006-07' to the government where it said, " A large number of road projects are often taken up on political considerations resulting in very thin distribution of resources over many road projects and consequent slow rate of project implementation."

It pointed out that among 183 ADP projects in the transport sector 138 were road projects and depicted a picture as to how much time will be needed if resources are allocated in the present pattern to complete those projects.

"Because of a large number of road projects, resource allocations to these projects have been such that at the current rate of implementation, nearly 20 percent of the projects will require a completion time of more than 10 years while about 10 percent of them will require completion time of more than 20 years," the BIDS recommendation said.

It suggested, "Inclusion of new road projects should be restricted in the budget 2006-07 and further allocations to projects that have experienced extremely slow progress so far should be minimised and resources should be diverted to projects which have progressed the most so that these can be completed at an early date."

It suggested a maximum ADP size of Tk 24,000 crore for 2006-07 fiscal against the planning ministry proposal of Tk 26,000 crore.

Analysing the target ADP size and their implementation rate over the last several years, BIDS showed that the government had always fallen much short of implementing its total ADP plan. For example, during the first eight months of the current fiscal, only 37 percent of ADP was implemented.

BIDS observed, "As a result, there is a rush to quickly achieve the target towards the end of the fiscal year. This results in wastage and inefficient use of resources. In 2006-07, the concern becomes even more serious as the risk of fiscal profligacy remains high in an election year."