Lower spending likely to narrow deficit

The country's budget deficit likely to remain below the level projected for the current financial year (FY) 2017-18 due to less-than-expected development and revenue spending.
The budget deficit in the six months to December 2017 was Tk 62.77 billion while it was Tk 64.44 billion during the same period a year back, according to a report prepared by the finance ministry.
Total expenses during the period under review were Tk 945.00 billion while revenue mobilisation was Tk 882.03 billion. External assistance coupled with domestic borrowing was used to meet the resource gap.
Development expenditure during the July-December period was Tk 214.60 billion, down by more than 4.5 per cent than the same period in the last fiscal year.
Similarly, revenue expenditure during the first half of the current fiscal year was Tk 688 billion as against Tk 692 billion during the corresponding period of the previous fiscal year.
People at the Finance Division told the FE that there was less-than-expected level of spending on both development and non-development.
"We had even much less-than-expected level of development expenses funded by revenue budget," said an official of the division.
The government machinery spent Tk 214.15 billion up to December through annual development programme (ADP) which was less by Tk 10.12 billion than the same period in the fiscal year 2017.
On the other hand, some economists who familiar with the fiscal development told the FE that both resources mobilisation and spending were low leading to low deficit.
"Both revenue and spending remained low…," said Dr Mirza Azizul Islam, an economist and adviser to the past caretaker government on finance and planning.
He said there are many ADP-funded projects sans adequate fund and proper monitoring leading to stagnancy of many of them.
On VAT act postponement, Dr Islam said the revenue gap is now somehow compensated during the period by low spending coupled with slightly higher growth in NBR taxes.
Dr Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh, told the FE, "The deficit will remain below 5.0 per cent of the gross domestic product (GDP)."
He added: "There will be at least Tk 300 billion revenue shortfall at the end of the financial year to June 30. We'll have much low spending in the year."
He said there are many development projects for the year but they will not be executed timely for lower execution capacity by government agencies.
On the other hand, another local think tank -- Centre for Policy Dialogue (CPD) -- at a press briefing few months back said deficit will remain under control but they had raised questions about the pattern of funding.
Toufiqul Islam Khan, a research fellow at the CPD, told the FE: "Higher dependency on the national savings scheme to fund the budget is a matter of concern."
National savings scheme's net funding to the national budget was Tk 215.35 billion as of December against Tk 301.50 billion annualised target.
On the other hand, he said, there will be less borrowing from the banking system than the amount estimated in the national budget.

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