Budget implementation rate 24.84% in 5 months

The ousted Awami League government had proposed a budget of Tk 7.97 trillion for the ongoing FY 2024-25, which remains in effect under the interim government. The budget is primarily divided into two major segments: development budget and non-development (operating) budget. In the first five months (July-November) of the current fiscal year, total expenditures under these two segments stood at Tk 1.97 trillion, marking an implementation rate of 24.84% of the total allocation.

In comparison, the budget implementation rate during the same period in FY 2022-23 was 22.22%.

According to a report published by the Finance Division of the Ministry of Finance, the implementation rate of the non-development (operating) budget in the first five months of the fiscal year stood at 33.6%, amounting to Tk 1.70 trillion. In the same period of the previous fiscal year, expenditure in this segment was Tk 1.25 trillion. The total allocation for this segment in the current budget is Tk 5.07 trillion.

However, development expenditure has declined to 8.83%, totaling Tk 247.37 billion in the first five months. During the same period in the last fiscal year, development expenditure was Tk 337.68 billion. The total allocation for this segment in the current budget is Tk 2.81 trillion.

Finance Ministry officials said that to prevent inflation, cost-effective steps have been taken in government expenditure in coordination with the contractionary monetary policy. Major cuts are being made in the implementation of projects taken for political purposes. Since the beginning of the fiscal year, the law and order situation has deteriorated due to the mass movement in July and the change of power in August, as well as the reshuffle in the administration, the implementation of government development programs is slow.

In such a situation, despite the overall cost-effective steps in government expenditure, the interest payment expenses on uncontrolled loans taken by the previous government have increased significantly. Apart from that, there is not much scope for cuts in the operating budget. Again, it was not possible to reduce the expenditure in the operating budget due to some unexpected increases in expenditure. Therefore, the overall budget implementation has increased slightly.

The highest expenditure sector as a single sector of the budget is interest payment, which is 35.96 percent of the total government expenditure. According to the report of the Finance Department, in the first five months of the current fiscal year, Tk71,213 crore of government expenditure was spent on paying interest on domestic and foreign loans. Of this, Tk63,624 crore was spent on paying interest on domestic loans and Tk7,590 crore was spent on paying interest on foreign loans. In the first five months of the last fiscal year, Tk40,445 crore was spent on paying interest.

If this trend of interest payments continues, Tk170,000 crore will be required by the end of the current fiscal year just to pay interest. The budget has allocated Tk113,500 crore for this sector. In the last fiscal year, the government's debt interest payment expenditure increased by 24.5 percent compared to the previous fiscal year, and for the first time, debt interest payment exceeded Tk100,000 crore and increased to Tk114,756 crore, which is 28 percent of the government's total expenditure.

The largest expenditure item under the operating budget in the five months is the salary and allowances of officials and employees which is Tk26, 452 crore. Last year, the amount was Tk25, 525 crore. In addition, Tk9,564 crore was spent on pensions for retirees. Meanwhile, Tk27,979 crore was spent on subsidies in various sectors including fuel and fertilizer in the five months.

At the same time, under the operating budget, among other sectors, Tk30,897 crore was spent on public order and safety, Tk19,335 crore on education and technology, Tk10,538 crore on defense, Tk12,753 crore on agriculture, Tk4,946 crore on health, and Tk1,753 crore on local government.