The budget execution rate for the last fiscal year (FY) ending in June 2024 was only 79 per cent largely due to a decline in development expenditure, according to the Finance Division.
The actual spending reached Tk 6.02 trillion or 79 per cent of the original budget of Tk 7.61 trillion for FY 2023-24.
Development expenditures, earmarked at Tk 2.6 trillion, saw an execution rate of 72.5 per cent. On the other hand, non-development expenditures-comprising mainly operational costs such as salaries and allowances-were relatively higher, representing an execution rate of 85.3 per cent.
The overall low budget execution rate, obviously, led to a lower deficit financing during the period under review.
The budget deficit was recorded at Tk 1.93 trillion, or 3.83 per cent of the gross domestic product (GDP), compared to the projected Tk 2.62 trillion, or 5.2 per cent of the GDP. Total revenue collection for the FY amounted to Tk 4.09 trillion.
The deficit was primarily financed through domestic borrowing of Tk 1.18 trillion, followed by foreign borrowing equivalent to Tk 711.57 billion.
Sources familiar with government spending told the FE that the deposed government of Sheikh Hasina faced pressure during the latter part of the FY owing to foreign exchange market volatility and rising inflation that forced them to cut spending.
Moreover, the central bank, following the recommendations by the International Monetary Fund (IMF), restricted money circulation to limit government borrowing.
"The implementation of the annual development programme (ADP) was lower than in the previous fiscal year due to austerity measures," said an official at the Finance Division.
The ADP for the fiscal year was initially estimated at Tk 2.63 trillion, but by the year end, only Tk 1.88 trillion had been spent, nearly 40 per cent lower than the original target.
However, the interest payments exceeded initial projections - the original estimate was Tk 943.76 billion, but actual payments amounted to Tk 1.15 trillion, or around 19 per cent of the total spending during the FY.
The interest payments on foreign loans surged by 60.53 per cent to Tk 151.5 billion during the FY, while payment on domestic loans rose by 20.5 per cent to Tk 996.06 billion.
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