2 years ago

Govt's budget spending growth slows in FY 22

Austerity steps, low demand main factors

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The government's budget outlay spending growth slowed tremendously in the last fiscal year (FY), 2021-22, mainly due to various austerity measures and Covid-related reduced demand, leading to narrowing down the fiscal deficit, according to official statistics.

The spending amount, released on Thursday, showed that it was Tk 4.81 trillion in FY 22 - with a growth of 4.6 per cent. The government unveiled a Tk 6.03-trillion budget for the last FY.

The additional execution amount in FY 2022 was just over Tk 200 billion higher than that spent in the FY 2021. The actual budget growth in FY 2021 was 8.9 per cent.

Budget implementation impacts the country's gross domestic product (GDP). A widening in implementation means higher GDP and reduced poverty rates.

In the meantime, this poor budget execution rate led to narrowing down of the budget deficit to 2.67 per cent of the GDP, which has never been seen in recent years. Even, it was 3.66 per cent of the GDP last year.

"The reason behind the fall is poor execution of both development and operating expenditures," said a senior official at the Finance Division, adding the operating expenditure also fell during the period.

He noted that austerity measures have been in place since the coronavirus outbreak in March 2020, and the demand side was also poor due to the prevalence of its omicron variant.

"Actually there was a sharp squeeze in travel spending along with poor demand due to Covid-19 restrictions," he added.

The development expenditure grew by less than 1.0 per cent to Tk 1.7 trillion in FY 2022. It was nearly 5.0 per cent up in FY 2021. The original size of the development expenditure was Tk 2.37 trillion for FY 2022.

Of the figures, the ADP execution was Tk 1.64 trillion with a growth of 2.7 per cent in FY 2022.

In FY 2021, the ADP execution was Tk 1.6 trillion with a growth of 3.07 per cent. The original ADP size for the year under review was Tk 1.25 trillion.

The operating expenditure grew by 6.6 per cent to Tk 3.05 trillion in FY 2022. The same was over 11 per cent in FY 21. The original size of the operating budget in FY 2022 was Tk 3.61 trillion.

However, there was another expenditure - outlay for food accounts - which was over Tk 100 billion. It was meant for stabilising the cereal market in last FY.

The government's total revenue mobilisation was Tk 3.37 trillion. The National Board of Revenue (NBR) resources amounted to Tk 2.94 trillion. Other amounts belonged to non-NBR and non-tax revenues.

However, the deficit or gap was Tk 1.44 trillion, mostly funded by borrowing from the banking system.

The official statistics show that the government borrowed over Tk 755 billion in FY 2022. It was more than double than FY 2021, when its borrowing from the banking sector was Tk 326 billion.

The net sale of the national savings certificates was Tk 199.2 billion in FY 2022, which was nearly 53 per cent lower than the previous year.

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