Budget execution lowest in four yrs

FE Report | Published: September 21, 2018 09:20:54 | Updated: September 21, 2018 15:53:53

The budget implementation rate has fallen to its lowest level in four years in 2017-18 fiscal year, signifying the poor capacity of the public agencies.

According to a preliminary estimate, the rate fell to 68 per cent of the original budget in Fiscal Year 2018 from 79 per cent in the year before (2016-17).

It was 81 per cent in FY2015- 2016 and 83 per cent in FY 2014-15, showed the ministry of finance data.

However, officials at the finance division told the FE the rate will increase after the final calculation.

The division will take a few more months for the final measurement of the budget implementation.

The total receipts by the national exchequer stood at Tk 2.14 trillion against the original target of Tk 2.93 trillion.

The budget deficit as percentage of Gross Domestic Product (GDP) was 2.7.

The data also shows that the total financing was Tk 592.67 billion.

Of the financing, the net foreign borrowing was Tk 42.54 billion while the net domestic borrowing was Tk 550.13 billion during the period under review.

The government repaid nearly Tk 20 billion to the banking system, but did not borrow afresh.

On the other hand, the government's non-bank borrowing was Tk 570.08 billion during the last fiscal year.

Economists have voiced concern over this declining trend.

They said the government keeps raising the size of budget every year, ignoring the widening gap between planning and execution.

Dr Zahid Hussain, lead economist at the World Bank's Dhaka office, said the increase in the size of the original budget has outpaced the execution capacity, resulting in a significant rise in implementation shortfall.

He said the target-setting has typically been based more on aspirations than on a dispassionately logical assessment of the ability.

He, however, said the net foreign borrowing will be much higher than that preliminary count.

"It shows that planning has not been done properly," Dr Khandker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), told the FE.

"Target-setting is very much important. In my view, there is a lack of proper target-setting," he said.

"We've been noticing recently that the implementation rate is going down each year," Dr Moazzem said.

He, however, said over the past decade, "we have not been successful in raising the tax-GDP ratio and it is now one of the lowest in the world."

"We cannot implement big budgets with such low level of revenue generation."

The finance minister AMA Muhith placed a Tk 4.0 trillion budget for FY 2017-18. Later it was revised to Tk 3.71 trillion.


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