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Bangladesh - 3 weeks ago

Less implementation against larger budget

Why such budget again and again?

Mahfuz Emran: Document analysis has shown that there is no record of 100 percent budget implementation in the last 53 years. But even then, big budgets are announced at the beginning of the financial year, and big revenue targets are imposed on implementation. At the end, the formulation officers are giving the revised budget by cutting the revenue and expenditure targets. It is also not possible to fully implement it by the end of the year. Every year it has become a permanent culture.
Accordingly, expenditure is being reduced by Tk 47,500 crores and income by Tk 22,000 crores from the current budget. So why is there such a budget again and again-the question of economists and related parties. According to them, it is not beneficial for the government to announce big budget and implement it less due to political considerations. It is destroying financial discipline and credential of the state.
Even the visiting International Monetary Fund (IMF) delegation has expressed a similar opinion. The agency has advised the finance department to keep the size of the next budget small. They also asked to reduce the budget deficit and increase revenue.
The finance department thinks that the spending capacity of various ministries is low behind the low implementation of the budget. Funds are allocated according to their needs. But they can’t spend the money. For this, the budget wing of various ministries from the finance department has started training on financial expenditure.
According to sources, the budget of Tk 7 lakh 61 thousand 785 crore was announced in the current financial year 2023-24 but it was brought down to Tk 7 lakh 14 thousand 418 crore in the revised stage. The size of the expenditure was reduced by Tk 47,667 crores. On the other hand, the total revenue target was cut from Tk 5 lakh crore to Tk 22 thousand crore. Out of this, the National Board of Revenue (NBR) has cut Tk 20,000 crore from the target of Tk 43,00,000 crore to Tk 410,000 crore. However, the deficit has increased in the revised budget. In the beginning, the deficit was Tk 2 lakh 61 thousand 785 crores, but it has increased to Tk 2 lakh 83 thousand 785 crores in the revised stage. The size of the annual development program was set as a target of Tk 2 lakh 63 thousand crore but was ultimately reduced to Tk 2 lakh 45 thousand crore. Development expenditure was reduced by Tk 18 thousand crores.
According to the sources, the revised budget was presented in the coordination council meeting regarding the government’s financial currency and currency exchange rate recently. Finance Minister Abul Hassan Mahmud Ali presided over the meeting. The revised budget will be approved in the National Parliament session on June 30.
If asked, the former caretaker government’s finance advisor AB Mirza Azizul Islam told that the budget targets are not achieved. Finally, its scope was revised to be smaller. Actual budget implementation at the end of the year is even lower. To get out of this trend, a realistic budget should be formulated. So that both apprehension and reality can be reconciled. Big budget is said in front of the people that the country will improve, there will be growth, in fact these are mostly not implemented. I think the budget should be realistic.
Devapriya Bhattacharya, Honorary Fellow of Center for Policy Dialogue (CPD), a private research institute, told that those concerned knew at the time of preparation that 100% of the budget would not be implemented. They do this only because of political considerations, the size of the budget should appear larger. When the budget is announced, there is excitement about how much the budget is. But not even once, how many percent of the last budget could not be implemented. Which is being done knowingly. This economist feels that fiscal discipline is being undermined due to political consideration of large budgets. It does not benefit the government in any way. Because the funding indications given may not materialize at a later date. The expenses that are decided to be incurred, later the concerned organization is disappointed not to get the money. This culture of over-declaration and under-implementation should be overcome and financial discipline should be preserved. It will increase efficiency and interest of people.
Analyzing the budget documents, it has been found that 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 fiscal years. Out of this, the budget implementation rate in the fiscal year 2022-23 is 84.21 percent. That year the original budget size was Tk 6 lakh 78 thousand 64 crores and the revised size was Tk 6 lakh 60 thousand 507 crores. The implementation rate in the financial year 2021-22 is 86.37 percent. That year the original budget size was Tk 6 lakh 3 thousand 681 crore and the revised level was brought down to Tk 5 lakh 93 thousand 500 crore.
Similarly, it has been observed that the budget implementation rate in the financial year 2020-21 was 81 percent of the original budget. In that year the size of the original budget was Tk 5 lakh 68 thousand crores. In the revised budget it was brought down to Tk 5 lakh 38 thousand 983 crore. The implementation rate for FY 2019-20 is less than 89 percent.
Former Finance Secretary Mahbub Ahmed told that according to the size of the country’s economy, the scope of the budget should be at least 25 percent of the GDP. But budgeting is like 15 percent, and spending is 13-14 percent possible. The main reason is lack of government revenue. Current revenue to GDP ratio is 8.2 and tax to GDP is 7.2 percent. As a result, there is no alternative to increase income. In addition, the concerned parties should create the ability to spend the money in the budget.
According to related sources, a decision is being taken not to increase the size of the next budget too much. The basic size of the budget is increased by 12 to 13 percent every fiscal year. The next budget size may be increased by less than 5 percent.

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