Staff Correspondent

The government has decided to slash the annual development programme of the current fiscal year by 13 to 17 per cent amid poor implementation of projects, rerunning the exercise seen for years.

Increased price subsidies on diesel, fertilisers and food would widen the budget deficit to 4.7 per cent of gross domestic product, finance adviser Mirza Azizul Islam said.

‘The ADP might be downsized to Tk 22,000 crore or Tk 23,000 crore,’ he told reporters Tuesday after a meeting of the resource committee and budget monitoring. The original development outlay is set at Tk 26,500 crore and an official evaluation earlier revealed a frustrating picture of implementation of development projects in the first half of the fiscal year to December 2007.

The finance adviser said that it was unrealistic to set a big ADP target, which would not be possible to implement. ‘We want to set a revised target, which will be realistic and achievable,’ he said.

Delay in procurement resulting from reluctance of contractors and officials in an atmosphere of fear and soaring prices of construction materials slowed the development spending to four years’ low in the first half of 2007-08 fiscal, said a planning ministry report discussed last week at an ECNEC meeting with chief adviser Fakhruddin Ahmed in the chair.

During the July-December period of the current fiscal year, the government could spend Tk 5,493 crore, which was only 21 per cent of the Tk 26,500 crore annual development programme. The development spending was 25 per cent in the year-ago period.

‘It still needs some more analyses to take a final decision about the extent of downward revision of the ADP,’ the finance adviser said after the Tuesday’s meeting. He said revenue collection had so far been encouraging and foreign aid disbursement was also very good.

‘But the problem is that the revenue expenditure has increased substantially due to enhanced subsidy on diesel for irrigation, fertilisers and food.’ ‘Subsidies in food and fertiliser have become new burdens on the exchequer which also subsidies petroleum products,’ he said.

As a result, the overall budget deficit would increase to 4.7 per cent of the gross domestic product from the budgetary projection of 4.2 per cent, he forecast. Bangladesh Bank governor, secretaries of finance, planning, ERD and IMED, and NBR chairman were present at the meeting.

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