Debt repayment and cost saving major challenge

Finance Dept’s Performance Report

Staff Correspondent: The finance department sees the big challenge in reducing debt and interest payments and sound management of public expenditure. Besides, keeping the pace of the economy normal is also identified as a challenge. The Finance Department wants to tackle this challenge by implementing the steps already taken.
These challenges have been highlighted in the ‘Performance’ report of the Ministry of Finance. On Monday, the finance ministry’s ‘performance’ agreement was signed with the Prime Minister’s office. News from related sources.
According to the report, the Russia-Ukraine war and geopolitical reasons have caused a slowdown in the global economy. This has affected the country’s economy. As a result, emphasis should be placed on improving the macroeconomic situation of the country.
In that report, it is said to give more priority to 6 activities to keep the overall situation normal for the current financial year. These include increasing citizen participation in the public pension system, keeping the budget deficit within 4.6 percent to keep government borrowing sustainable, and updating the macroeconomic framework in the medium term to align fiscal, monetary and exchange rate policies. In addition, making realistic targets of income and expenditure in the budget every year. So that the gap between the actual income and expenditure figure is less than the figure announced in the budget.
According to sources, after signing the executive agreement with the Prime Minister’s Office, the process of its implementation has started. A performance agreement usually provides an idea of what kind of work a ministry will do to achieve certain goals for an entire year. Besides, the problems and challenges in doing these things are identified.
When asked, former senior secretary (Ministry of Finance and Commerce) Mahbub Ahmed told that there should be an evaluation of whether the tasks shown in the annual performance agreement are achieved or not. The challenges that have been highlighted are challenges in the economy.
But beyond this, another challenge is to coordinate activities between monetary policy and fiscal policy. He further said that fiscal policy has two aspects, expenditure and revenue sectors. The issue of expenditure is under the Ministry of Finance. Now there is talk of coordination between monetary policy and fiscal policy. It should be properly managed.
The performance report for the current financial year (2024-25) highlights the economy’s ‘problems and challenges and future action plans’. It is said that the major challenges are to improve the projection process of macroeconomic drivers, increase efficiency in overall debt management including cash, development of economic management, rationalization of government expenditure and increasing the capacity of officials.
A senior official of the Ministry of Finance said that the government’s foreign debt is likely to increase in the current and next two fiscal years as a reason for citing the challenge of debt management. As a result, the debt repayment pressure will increase in the economy.
It is known that the government’s target for borrowing in the current financial year is Tk 2 lakh 56 thousand crores. Out of this, foreign debt is Tk 90,700 crores and domestic debt is Tk 1 lakh 65 thousand 300 crores. Tk 1 lakh 13 thousand 500 crores will be spent on paying interest against this loan. Apart from this, the principal repayment of some mega projects will start in the financial year 2026-27 and in that year Tk 62 thousand crore will be spent as installments. According to the Department of Economic Relations, this pressure will continue till 2034.
Meanwhile, while determining the rationality of expenditure, government expenditure has been reined in again. Its scope has already been ordered to stop the expenditure of ‘Wholesale Allocation Fund’, foreign travel of government employees, purchase of vehicles for ministries and organizations. Construction of new buildings will also be closed. In order to save money, 20 percent of the total allocation of electricity, petrol, oil lubricants and gas-fuel has also been brought under the moratorium.
All ministries, departments and other institutions, directorates under the ministry, directorates, departments, autonomous institutions, public sector corporations and state-owned institutions have been ordered to be frugal in the related sectors of their management and development budgets.
In that report, it is said that macroeconomic discipline will be maintained through sustainable debt management. A medium term plan will be formulated in the economy. Besides, efficient financial policy formulation and management will be done. The pension and salary related activities of all the officers and employees will be brought under automation.
Meanwhile, the economy of Bangladesh is already under pressure due to the dollar crisis. Besides, exports and remittances are not increasing as desired. Experts fear that if the supply of dollars is not increased in such a situation, the crisis surrounding foreign debt may intensify.