Budget execution on slow lane amid election impact

The execution of budget for the current fiscal year (FY 2023-24) is on the slow lane as only 11 per cent of the total outlay spent during the first quarter (Q1), official data showed, apparently reflecting the impact ahead of the national election.
The rate of implementation was 1.0 percentage point lower in the July-September quarter than that of the same quarter of the FY2022-23, according to the Ministry of Finance (MoF) data released recently.
The government ministries and agencies spent Tk 828.81 billion in Q1 from the total Tk 7.53 trillion in operating and development budget.
During the corresponding period of FY2023, the public bodies spent Tk 789.19 billion from the total Tk 6.74 trillion of outlay in the operating and development budget.

The budget spending growth has slowed tremendously in the current FY mainly due to the austerity measures, impact of national election and reduced demand of some ministries MoF officials said.
The lower spending rate has also led to narrowing down the fiscal deficit, the official statistics showed.
The poor budget execution in the Q1 has not widened the deficit in the national accounts, rather made a balance of 0.24 per cent of the GDP as compared to 0.04 per cent of GDP in FY2023.
Earlier, the government estimated a budget deficit (excluding grants) of 5.28 per cent of GDP for the current FY2024. Including grants, the deficit is expected to be 5.20 per cent of GDP, the MoF officials said.
The budget execution impacts the country's gross domestic product (GDP) as the public spending is one of the major tools of the consumptions in the national product. An increased rate of budget implementation means higher GDP and reduced poverty rates.
A senior MoF official said: "The main reasons behind poor budget execution are austerity measures, failure in implementing development projects and other works in the government and the national election."
Generally, the development expenditure remains low in the Q1, but this time the operating expenditure also remains poor, resulting in the lower execution rate, he added.
The government spent Tk 674.95 billion, 14.2 per cent of the total Tk 4.75 trillion operating outlay, during the Q1.
In the corresponding period of last FY, the government utilised Tk 662.38 billion or 16.0 per cent of total Tk 4.14 trillion operating outlay.
The government agencies have failed to execute the development budget in time as they spent Tk 153.86 billion during Q1 FY2024 which is 5.54 per cent of the total Tk 2.77 trillion outlays.
In the corresponding period last FY2023, they had utilised Tk 126.81 billion, 5.0 per cent of the total development outlay of Tk 2.59 trillion.
Another MoF official said that they were expecting to streamline the budget execution from the second half of the current FY as the election will be completed on January 7 and the government will rethink its austerity measures.
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