Budget execution slow, dev spending slowest

Bangladesh's budget execution in the outgoing fiscal year (FY) has gone slower than last fiscal's largely for government agencies' incapacity for implementing development works in time and financial crunch, analysts said.
The government ministries and agencies spent an aggregate amount of Tk2.55 trillion, accounting for 37.62 per cent of the total Tk 6.78-trillion budget outlay, during July-February period of the fiscal year (FY) 2022-23, Ministry of Finance (MoF) officials said Monday.
In the same period last FY, they utilised Tk2.31 trillion, or 38.25 per cent of the Tk 6.036 trillion worth of budget outlay.
According to MoF data, although the operating budget-utilization rate was 46.9 per cent in the July-Feb period of the current fiscal, the development budget-implementation rate was only 20.15 per cent.
Meanwhile, the expending rate on interest payments was the highest amongst different heads of expenditure in the national budget.
During the eighth months from July to February, the government spent the highest 46.9 per cent of the total Tk 803.75 billion worth of allocation for interest payments, the MoF data showed.
Analysts say the full utilization of the national budget is unlikely to be achieved in the current fiscal because of government organisations' "inefficiencies".
An MoF official has said the government ministries and divisions performed "worst" in the development-budget execution, with only 20.15 per cent of the total funds spent during the first eight months of the year.
However, the operating budget-implementation performance was higher during the period under consideration.
The government spent Tk1.93 trillion, or 46.9 per cent of the total Tk4.11 trillion of operating- expenditure funds allocated in the budget, during the first eight months of the FY2023.
And Tk 523.06 billion, or 20.15 per cent of total Tk2.596-trillion development outlay, was defrayed in the July-February period, the finance officials said.
The development-budget utilization in the same period of the last FY2022 was Tk 536.99 billion, or 24.19 per cent of the revised Tk2.21-trillion allocation.
On the other hand, the operating-budget utilization in the first eight months in the last FY was Tk1.73 trillion, 47.25 per cent of the Tk 3.66-trillion allocations on this head, the MoF data showed.
"Mostly the government's austerity measures have hit the budget-implementation agencies, which ultimately undermines the overall expenditure in eight months," says a senior MoF official.
They are hopeful of expediting the spending in the remaining period of the current fiscal as the implementation usually gets in faster gear in the last couple of months.
Another MoF official has said the interest payment is supposed to be borne from the Tk4.11- trillion operating budget in the current FY. The government has already spent Tk562.22 billion, or 69.9 per cent of the total Tk803.75-billion allocation, during the July-February period. The amount, 19.2 per cent of the operating budget, is earmarked for interest payments against public loans from home and abroad.
"Since the exchange rate of USD (against taka) has already increased by some 25 per cent over the months, the government needs to expend higher funds for interest payments for its outstanding loans," he told the FE.
He said although the borrowings from both the internal and external sources did not increase so much, but its total amount of repayment is rising due mainly to the surging rate of the dollar.
Out of the operating budget-spending categories, agriculture sector's utilization rate was the second-highest at Tk176.11 billion, 67.8 per cent of the total Tk259.78 billion allocation, during the first eight months.
Besides, the education sector (54.3 per cent), and the Recreation, Culture and Religious Affairs (RCRA) sector (47.4 per cent) were in the third and fourth positions in terms of their operating- budget spending from their outlays during the period.
Out of the development budget, the Recreation, Culture and Religious Affairs sector spent 51.58 per cent, the HCS 39.67 per cent, the Agriculture, Fisheries and Livestock 29.52 per cent, the Social Security and Welfare 25.60 per cent, the LGRD 24.26 per cent, the General Public Services 24.05 per cent, and in the Transport and Communications sector was 21 per cent, MoF data showed. Some of the sectors with large allocations like Health, and Education showed a less-than-average performance during the same period.
Development expenditure includes ADP (Annual Development Programme) and Non-ADP FFW (Food for Work) and transfers. The government framed an incremental budget of Tk6.78 trillion for the FY2023, 4.25 per cent up from the revised budget for the last FY2022.

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