Budget implementation a big challenge

Ministry instructions to speed up

Farhad Chowdhury: According to the plan, the implementation of the budget on time and properly is still a big challenge, according to the Ministry of Finance. The finance department of the finance ministry said that there is no proper plan in terms of revenue collection and government spending. Although ministries, departments and other institutions have gained enough skills in setting annual targets, the budget is not being implemented on time and properly, so it is still a big challenge. The Ministry of Finance has given some instructions to overcome the challenge.
According to sources, one of the main reasons for the imbalance between the government’s income and expenditure is the lack of proper planning in terms of revenue collection and government expenditure. The budget implementation of various ministries and departments and other institutions is usually slow in the early part of the fiscal year. Similarly, slowness in revenue collection can be observed at the beginning of the financial year. On the other hand, government employees have less expenditure compared to all other items except salaries and allowances. Actions are taken towards the end of the financial year especially in the payment of various utility bills, maintenance of repairs, construction and completion works and procurement of goods. As a result, it is not possible to ensure the quality of government expenditure in many cases. In addition, at the end of the year, the government has to take responsibility for the unplanned debt. It can’t ensure financial discipline. In this situation, if it is possible to take advance planning and implement it in order to implement the budget properly and on time, it is possible to avoid unplanned government debt and reduce the debt related expenses of the government to a significant extent.
In order to ensure smooth implementation of the budget in the beginning of the financial year, the Finance Department of the Ministry of Finance has instructed every ministry and department to adopt a quarterly (three months) budget implementation plan, properly implement it and monitor the progress of budget implementation on a quarterly basis in the budget management committee meeting. For this purpose, the ministries and departments have been asked to send their budget implementation plans to the finance department by October 8. The finance department has also created various forms for planning and reporting. Besides, within one month after the end of each quarter, the budget implementation monitoring report should be sent to the finance department.
These instructions have been given in a circular titled ‘Budget Implementation Plan Formulation and Implementation Progress Monitoring’ recently issued by the Finance Department.
A review of the data of the Budget and Finance Department shows that it is generally not possible to implement the entire budget in any financial year. Even the revised budget is not fully implemented. An average of 81 percent of the original budget and an average of 87 percent of the revised budget have been implemented in the last five years.
Less than half of the budget has been implemented in the first 9 months of the ended 2022-2023 fiscal year. During the period under discussion (July 2022-March 2023), the budget implementation rate is 44.67 percent of the original budget and 45.86 percent of the revised budget. The size of the original budget for the current fiscal year 2023-2024 was Tk 6 lakh 78 thousand 60 crores. In the revised budget, its size has been estimated at Tk 6 lakh 60 thousand 507 crores. Against this, the total expenditure in 9 months stood at Tk 3 lakh 2 thousand 892 crores.
The circular says that every year some new policies, programs and activities are announced in the budget. Some of the activities announced in the last three years are still under implementation. Besides, some activities have been announced in the current budget. In order to implement them on time and properly, the implementation plan should be adopted using the given form.
The circular has asked to set quarter wise targets based on targets set against various items with emphasis on revenue generation. If there is a record of seasonal decline in the revenue collection of an item, the revenue collection target against the respective item should be taken into consideration. In relation to the expenditure plan, the circular says that against all other items including salaries and allowances of government officials and employees, the expenditure shall be determined at a proportional rate every three months. However, in this case, the increased (annual increment) salary of the employees should be taken into consideration. Besides, within the third week of every month, all government utility bills of the previous month must be paid and for this purpose, the required amount must be shown in every quarter. Similarly, for other items included in the supply and services sector, the allocation should be determined on a three-month basis taking into account the expenditure pattern of the previous years.
Repair and conservation work of all types of government works should be started from the first quarter of the financial year. So that the balance is maintained in the payment of bills for these works in different quarters and the pressure of payment of excessive amounts in the last quarter of the financial year is not created. In terms of procurement and procurement of assets, a ‘procurement plan’ should be prepared for procurement of goods and services under both operating and development budgets. According to this plan, the amount required to be paid every quarter should be properly reflected in the expenditure plan.
Foreign grant and loan collection funds are generally disbursed in four equal installments in the four quarters of the fiscal year, so the circular asks to set targets accordingly.