Non-dev capital spending may go up in FY ‘15

Jasim Uddin Haroon | Published: May 28, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

The government is likely to spend 13 per cent more on the non- development capital expenditure in the next fiscal (2014-15) than that of the outgoing fiscal, sources said.
The probable rise in the expenditure is attributed mainly to the increase in allocation on account of recapitalization of the scam-hit state-owned commercial banks (SoCBs) and acquisition of shares and equities.
The non-development capital expenditure is set to be fixed at Tk. 262.70 billion in the next fiscal as against the estimated spending of Tk. 233.20 billion this fiscal.
Out the projected expenditure, Tk. 60 billion could be earmarked for recapitalization of the public sector banks. The government's spending on this head during the outgoing fiscal (2013-14) is likely to be around Tk.45 billion.
The allocation of resources for non-development capital expenditures made a quantum jump from the current fiscal. As against an allocation of Tk 77.35 billion in the revised budget for the fiscal 2012-13, the government allocated about Tk. 210 billion in the budget for the current fiscal. But the actual spending this fiscal could be more than Tk.233 billion.
The rise in expenditure on this account has been mainly due to a big jump in government investment in shares, equities and recapitalisation of public sector banks.
Sources said increased investment in all these areas would also continue this fiscal. The non-development capital expenditure was equivalent to 1.2 per cent of the GDP in the fiscal 2008-09. But the same is set to increase to 3.4 per cent this fiscal.
Economists dislike this kind of government investment, which, they say is nothing but wastage of public money. In many cases, the government ultimately writes off the funds made available to different public entities in different forms.
Dr. Zahid Hussain, lead economist at the Dhaka office of the World Bank (WB) talking to the FE said: "Transparency is hardly maintained in such type of expenditures."
He said the government instead of making such investment should address the causes responsible for making the public enterprises loss-incurring entities.
He said problems relating to the rise in the non-performing loans have also to be addressed instead of recapitalising the public sector banks.
The non-development capital expenditures mainly involve acquisition of assets and works, investment in shares and equities and recapitalisation. Dr. Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh (PRI) said this type of refinancing of the state-owned commercial banks is one kind of 'reward' for the officials who were behind the recent scams.
"Such recapitalisation would only encourage bankers to be more corrupt," Dr. Mansur, an economist with specialisation in financial sector, told the FE.