Bangladesh News

The government is likely to revise the budget for the current fiscal year, by downsizing the development budget and expanding the revenue budget.

The revenue budget might be expanded by 16 percent — mainly to cover additional expenditures in subsidies, social safety net programmes and interest payments on government borrowings.

The Tk 87,137 crore budget for the FY08 may exceed Tk 90,000 crore with the additional expenditure, a high official at the finance ministry told The Daily Star.

“The finance and planning ministries are now working out the revised budget and they will come up with revised figures by the end of this month,” said the official.

Planning ministry sources said the total allocation for development budget for the FY08 was Tk 26,500 crore and the government is considering reducing it to Tk 22,500 crore.

The total size of the revenue budget, excluding Tk 7,523 crore for Bangladesh Petroleum Corporation (BPC) as bonds, was Tk 53,114 crore and it may reach Tk 62,000 crore in the revised allocation.

According to a monthly report of the finance ministry on fiscal status as of December 2007, 46.8 percent of the total allocation for revenue expenditure has been spent in the first six months of the fiscal. On the other hand, the expenditure scenario of the development budget is bleak as only 21 percent of it has been spent during the same period.

The government spent 59.6 percent of the total allocation for interest payments against government borrowings in the first six months, sources said adding that another Tk 300 crore might be needed only for the interest payments against domestic borrowings.

Sources said 51.5 percent of the total allocation for subsidies and other expenditure has been spent during the first half of the fiscal. “Expenditure against subsidies in the second half of the fiscal will be increased,” said a source.

The government allocated Tk 1200 crore for the payment of BPC’s prior loans from state-owned banks. Energy ministry officials said the BPC’s total loss in the current fiscal might exceed Tk 6,000 crore as the corporation is selling petroleum products below international prices.

“The government is going to provide Tk 2,200 crore to the BPC as shares and equity and Tk 400 crore has already been allocated,” said a source.

Expenditure in revenue budget in the current fiscal has also increased due to increased subsidies in fertiliser, diesel and electricity.

The FY08 budget allocated Tk 4,200 crore as subsidies to fertiliser, diesel, electricity and other components to support agriculture.

The industries ministry in the middle of the fiscal has asked for Tk 4,950 crore as subsidy only against fertiliser, said sources at the finance ministry.

A finance ministry official said the ministry is planning to increase the total size of subsidies to fertiliser, diesel and electricity to Tk 6,200 crore.

The total allocation for food budget for the current fiscal was Tk 2,900 crore and the total expenditure for food procurement at the end of the fiscal may reach Tk 4,600.

“We expect an additional expenditure of Tk 2,000 crore in the social safety net programmes,” said a finance ministry official.

“Though there is a huge additional expenditure in the revenue budget, it will not cross the targeted limit of the budget deficit,” the official added.

The spending in the development budget is very slow and it not possible to spend more than Tk 17,000 crore by the end of the fiscal against the total allocation of Tk 22,500 crore, he said.

The size of the revised development budget in the last fiscal was Tk 21,600 crore, but spending was only Tk 17,851 crore, noted the official.

“Implementation rate of the development budget is slower compared to that of the previous year. So, we will be able to keep the budget deficit below 4 percent of GDP,” he said.