FY '23 budget deficit likely to remain well below estimated level

The budget deficit is likely to be much lower than estimated for the last fiscal year (FY 2022-23) as spending from the operating and development outlays would remain well short of the targets at the end of the FY, officials said on Saturday.

The deficit financing stood only at Tk 810.16 billion, 1.82 per cent of the gross domestic product (GDP), until April last from the FY's total outlay of Tk 2.42 trillion, 5.4 per cent of GDP, Ministry of Finance (MoF) data showed.

Officials attributed it mainly to the austerity measures on budgetary spending imposed by the government amid the domestic and global economic situation. As part of the measures, the government cut some less important projects from the development budget.

They, however, said the deficit financing would have increased to some extent in the last couple months of the just out FY, but still the budget deficit would remain below 5.0 per cent of GDP at the end of June, 2023.

The total budget outlay for the FY 2022-23 was Tk6.78 trillion.

According to the MoF, the government ministries and agencies utilised Tk 838.19 billion, 32.29 per cent of the Tk 2.59 trillion development budget, and only Tk 2.71 trillion, 65.8 per cent of the Tk 4.11 trillion operating budget, during the July-April period of the last FY.

In the same period of previous FY2022, the development expenditure was 34.95 per cent of the revised budget outlay and the operating budget spending rate was 63.9 per cent of the revised budget, official data showed.

The spending on the Annual Development Programme (ADP) was only 84.16 per cent during the 12-month period of FY2023, which is much lower than 92.74 per cent achieved in FY2022, according to the Implementation, Monitoring and Evaluation Division (IMED) data.

Officials involved with the ADP spending told the FE that the austerity measures affected their spending as the MoF imposed some restrictions on certain portions of the allocations.

MoF officials said the budget deficit would ultimately go up to some extent at the final accounts of the last FY2023 as the public fund spending usually takes place in the last couple of months.

"The budget deficit will go up to some extent ultimately, but may remain less than 5.0 per cent against the target of 5.4 per cent of the GDP," said one of the officials.

According to the MoF, the government borrowed Tk 674.74 billion until April last from domestic sources like banks, non-banking financial institutions and savings certificates, and Tk 303.08 billion from external sources, official data showed.

Among the biggest sectors of the Tk 4.11 trillion operating budget, the defense sector spent lowest 54.8 per cent until April last, while transport and communication sector 57.6 per cent, and the public order and safety sector 60.2 per cent.

The government spent highest on agriculture and interest payment sectors during the first 10 months of the last FY. The agriculture sector's operating budget expenditure was Tk 250.65 billion, 96.5 per cent of its total Tk 259.78 billion allocation.

The government has also spent the highest amount in interest payment as it paid Tk 752.87 billion, 93.70 per cent of total Tk 803.75 billion allocations in the operating budget for FY2023.

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