2 months ago

Big budgets and their implementation

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The execution of the revised budget worth Tk 6.56 trillion for the financial year 2022-23 during the first eleven months was around 64 per cent. It will take time to get the actual amount of budgetary expenditure for the entire FY 2023. One, however, can be least assured that the government that spent less than 6.0 per cent of the budget outlay per month, on an average, could not manage an expenditure of Tk 2.36 trillion or 36 per cent of the revised budget just in one month. The June expenditure would have been even bigger if the original budget had remained unchanged. 

The shortfall was strikingly high with development expenditure. The government could spend only 46 per cent of the revised annual development programme (ADP) in 11 months. Thus the operating expenditure during the period under review was 74.5 per cent.

Usually, the finance ministry releases a substantial volume of money in the final month of a financial year for various government agencies against their allocations. But the release of funds worth nearly Tk 2.5 trillion in 30 days is pretty difficult. It is not just a question of the implementation capacity of the government entities. Mobilisation of funds, that too, during an apparent economic slowdown is also a big issue.

Yet, in the final estimate, the budgetary expenditure for the entire FY'23 might be between 80-90 per cent. Such huge spending in the last month of a financial year will be taken with a grain of salt.

The issues of budget size and the capacity of the government to execute the same are interlinked. Many an eyebrow was raised when the finance minister announced a big budget for the last fiscal given the ground realities. But the minister pooh-poohed the criticism. The repetition of the same situation concerning the execution of the budget for the current financial year is not unlikely. The finance minister, as always, is confident that the economy is going in the right direction. In a recent statement in parliament, he described the people who saw the country's economy in bad shapeas ignorant of economics.

The latest forecast of the Asian Development Bank (ADB) revising Bangladesh's GDP growth upward for the current financial year might embolden the finance minister to heighten further attacks on his critics. The ADB also has predicted that inflation, which is close to a double-digit figure, would come down to 6.6 per cent in the latter part of the current FY. Despite all the positive comments and predictions, most consumers, who have been paying through their noses for every essential item and experiencing erosion in their incomes, have developed a gut feeling that the economy is not in a good shape.

The government too is now forced to resort to austerity measures for the dearth of both greenback and local currency. It has borrowed heavily from the banking system, thanks to the decline in private credit growth in recent months.

When the finance minister placed the national budget for the current FY in parliament in the first week of June, the economy was already in a tight spot. Yet the size of the budget seemed pretty ambitious to many. Finance ministers in this part of the world traditionally are prone to placing ambitious budgets. They do it, maybe, for playing to the gallery. The government's capacity to mobilise the targeted resources, domestic or otherwise, and spend the same does not matter much to the framers of the annual budget.

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