Budget surplus heralds interim govt's initial reign

A modest budget surplus heralds interim government's initial reign as tightfisted spending to weather inherited crunch yielded Tk 48.38 billion fiscal savings in the July-September period by official count.

However, the surplus in the first quarter of the current financial year 2024-25 was one-third lower than the amount of the same period last year.

This surplus is primarily attributed to poor spending on public-works projects under the Annual Development Programme (ADP), as the post-uprising government reset priorities and laid off less-priority undertakings.

During the three-month period of this fiscal year, total government revenue receipts exceeded Tk 1.0 trillion while spending amounted to Tk 963 billion, leaving aside a fiscal surplus of Tk 48.38 billion or 0.07 per cent of Bangladesh GDP or gross domestic product.

The National Board of Revenue (NBR) tax collectors collected Tk 763.73 billion in tax revenues, complemented by Tk 239.54 billion in non-tax revenues.

Together, these figures reflect a 4.7-percent increase in total revenue during this period, compared to Tk 955.15 billion collected during the same quarter a year earlier.

Non-tax revenues, consisting of dividends, fees, tolls and others showed a robust growth, increasing by over 31 per cent year on year, which "significantly bolstered the fiscal position", revenue officials said.

Interest payments on existing debts consumed the largest share of government spending during this period, accounting for 37.3 per cent of the total budget allocation of Tk 1.13 trillion earmarked for debt service in FY25.

In contrast, expenditure on the ADP -- a cornerstone of infrastructure development -- remained subdued.

Only Tk 105.81 billion, or less than 4.0 per cent of the Tk 2.65 trillion worth of the development budget, was utilised during the quarter under review, according to a government report.

Total government spending, however, rose over 21 per cent year on year, reaching Tk 963 billion in Q1 FY25, the report says.

In the same quarter last year, the government had posted a budget deficit of approximately Tk 120 billion, or 0.24 per cent of the GDP.

This year's surplus appears to provide temporary relief for the government but there is need for additional revenue measures, especially as the government faces a projected Tk 1.38-trillion shortfall for the remaining three quarters of the fiscal year.

Officials at the Ministry of Finance told the FE that "surplus is a common phenomenon while compared with earlier quarters of the past fiscal years, but the spending typically ramps up in subsequent quarters, showing wider gap in the last quarter."

They have cautioned, however, that deficits are expected to grow from Q2 onwards, potentially reversing the positive fiscal balance recorded in Q1.

Despite the surplus, concerns persist regarding ADP's underperformance position, which could hinder long-term economic growth.

However, the budget deficit (excluding grants) for the fiscal year 2025 is projected at 4.47 per cent of the GDP.

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