Spendthrift on government operation spending, stingy on dev expenditure

Civil servants appear spendthrift in spending from the operating budget that goes for running government but tightfisted in defraying development outlay as the first quarter of this fiscal year shows the hiatus.
Interest payments against public-debt buildups, however, dominated the operating-budget expenditures as the government had to spend more than half the total expenditures for the debt service alone, Ministry of Finance (MoF) officials said.
Economists say if government fails to boost its local tax and revenue income, and mobilise more foreign-exchange earnings, Bangladesh risks getting into "debt trap" in the near future.
Government agencies had spent 16.3 per cent of the operating or non-development budget during July-September period--the first quarter (Q1) of the current fiscal year 2024-25, while only 3.75 per cent from the development outlay, official data showed.
According to the Ministry of Finance (MoF), the civil servants spent Tk 825.68 billion or 16.3 per cent of the Tk 5.069 trillion worth of operating budget during the three months.
In the same period last FY2024, the government had utilised Tk 630.61 billion, 13.91 per cent of the Tk 4.53-trillion outlays in the operating budget.
Only Tk 105.65 billion, or 3.75 per cent of the Tk 2.81 trillion, was spent from the development budget during the past July-Sep period.
Earlier in the Q1 of last FY, Tk 155.17 billion, 5.97 per cent of the Tk 2.60-trillion outlay in the revised development budget, was spent.
Officials at some ministries said the regular expenditures, including salary, wages, and honorarium, are defrayed from the operating budget, resulting in higher spending from it.
On the other hand, the ministries and agencies failed to implement their development-project works in time under the Annual Development Programme (ADP) and other sectors, which slowed down the development-spending pace, they added.
The government framed a Tk 7.97-trillion national budget, including the operating expenditure, development expenditure, net outlay for food-account operations, and loans and advances, for the current financial year.
When asked, a senior MoF official said since the development expenditures had been scrutinized strictly by the present interim government to curb unnecessary expenditures, the spending for the projects decreased.
"On the other hand, we have not intervened in the regular expenditures from the non-development budget, which increased the operational expenditure of the government during the Q1 this fiscal," he said.
"The interest payment had eaten up almost half the total operating-budget expenditures during July-September period this fiscal," the official added.
The deposed Sheikh Hasina government had borrowed billions of US dollars from the external bilateral and multilateral lenders for implementing "so-called megaprojects which now affected the country's financial discipline", says another MoF official.
"But we are hopeful of getting a better and quality budget spending at the end of this fiscal year under the purview of the interim government," the finance official adds.
According to the MoF, the government spent Tk 423.88 billion, 51.34 per cent of the total Tk 825.68-billion spending, from the operating budget during Q1FY2025 for repaying the outstanding domestic and foreign loans.
The government usually borrows money from the banking and non-banking sources in the country and from the multilateral and bilateral lenders outside the country for minimising the resources gap between the income and expenditure in the national budget.
Dhaka University Economics Professor Dr Selim Raihan told the FE that the past Sheikh Hasina government borrowed huge amounts from both domestic and external sources which now started to affect the fiscal discipline.
"If this interim government does not work to boost the revenue income and foreign-exchange earnings, the country will fall into debt trap in the near future," he says on a note of caution.
Prof Raihan notes that it is good thing that this government is spending development budget very cautiously. "But it should give more effort to mobilise internal resources, remittance and export earnings in the coming years."

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