Austerity During Pandemic: No work order in rest of fiscal year

As the government sticks to austerity in face of the pandemic, it has asked all ministries, except health and agriculture, not to issue work order for any physical works during the remainder of the current fiscal year.

The finance ministry came up with a circular in this regard Monday and forwarded it to all ministries and government agencies concerned, officials said yesterday.

The Ministry of Health and Family Planning, which is spearheading the country's fight against Covid-19, and the Ministry of Agriculture, which needs to ensure food safety amid the pandemic, will remain out of its purview, they said.

The directive came into effect immediately, according to the circular.

The circular reads no "Notification of Award" can be issued for any physical works (construction/structure) under the revenue and development budget in the remainder of the current fiscal year to combat the ongoing pandemic situation following the government's austerity policy.

The fiscal year ends on June 30.

However, physical works of the work orders already been given will continue as usual.

After the completion of the bidding process, the project implementing authorities issue "Notification of Award" to the successful bidder and then sign relevant contracts with it for project works.

Different ministries and divisions, including the Road Transport and Highway Division, have already asked its agencies to comply with the finance ministry's directive.

The move came at a time when the country is going through some restrictions imposed on the movement of people and public transport to contain the second wave of the Covid-19 pandemic.

However, works of different construction projects, including the high priority fast track ones, will continue, albeit not in the usual pace due to problems related to workers and supply of construction materials.

WHY SUCH A DECISION?

The country's economic activities were hit hard after the government imposed a two-month coronavirus-driven shutdown from March last year

As the situation improved slightly, the activities were coming back on tracks gradually. The second wave of the pandemic, however, has once again slowed things down.

Following the government's austerity policy due to the pandemic, the finance ministry in July last year had halted the Annual Development Programme (government portion) for the "low-priority projects".

The "low-priority projects" account for 30 percent of the total project cost of any particular ministry.

With the improvement in revenue collection, the finance ministry later in October changed the decision. It then asked to halt 25 percent ADP funds from all development projects.

While approving the revised ADP last month, the finance ministry further softened its stance on the disbursement of funds from ADP. Now, any ministry would be allowed to use 85 percent of ADP allocated for the projects.

But the situation started to change again after the surge in Covid-19 cases and death since last month.

The authorities' possible additional expenditure for the health sector, especially for procuring Covid-19 vaccines, finance assistance to low income people affected by the pandemic and low revenue collection prompted the government to come up with the new directive, finance ministry officials said.

The government has to take majors preparations to fight the second wave and it needs funds for this, they said.

It is now planning to procure vaccines from China and Russia after the Indian government suspended exports of the Oxford-AstraZeneca vaccine being manufactured at Serum Institute of India. Officials believe the prices of the Chinese and Russian vaccines will be higher than the one bought from India.

Moreover, the government has to spend more for the low income people, who are hit hard by the ongoing Covid-driven "lockdown", the officials said.

Besides, project implementing agencies tend to spend allocated money in the last two or three months of the fiscal year and in many cases this tendency leads to waste of money, they added.

Around 41.92 percent of the ADP target has been achieved till March, show documents.

"Keeping all these aspects in mind, the government took the [new] decision as a precautionary measure," said a finance ministry official, wishing not to be named.

Meanwhile, a deputy secretary of the ministry said the government's income from VAT and other sectors has been low this fiscal year and the National Board of Revenue is struggling to achieve its target.

"It is also not clear how this Covid situation will turn out to be. Considering all these, the government took the decision," the official said.

The NBR had set a target to collect Tk 2,27,764.36 crore in the first nine months of the fiscal year, but  it managed to get Tk 1,78,263.18 till March, which is around 22 percent short of the target, show NBR documents.

WHAT IMPLEMENTING AGENCIES SAY

Abdus Sabur, chief engineer of the Roads and Highways Department, which is now implementing around 200 development projects, said they have received the circular.

"We will implement the directive after talking with our higher and field level-officials," he told The Daily Star yesterday.

However, sources at the RHD said there was an ambiguity regarding the directive and RHD authorities will hold a meeting with the road transport and highway division secretary today to clarify the issue.

An RHD official said they received a particular amount of allocation for the projects and they need clarification regarding whether they would not issue any "Notification of Award" even after having allocated money.

"We might have to send the money back," he said, wishing anonymity.

Besides, there are projects, which would take more than two or three years to complete and contractors may be given money in the next fiscal year, he said. "Our question is whether we have to halt issuance of notification of award in that case," he said.

Bangladesh Railway is now executing 39 projects.

BR Director General Dhirendra Nath Mazumder told The Daily Star last night, "I have heard about such a directive and will take next steps after our offices will reopen [after the ongoing restrictions]."