Over Tk 145,000cr spent in a month
Budget witnesses unusual spending
Mahfuja Mukul: The fiscal year ended five months ago butthe Ministry of Finance released the full picture of budget expenditure in the financial year 2022-23 yesterday. According to the report of the ministry, the total expenditure in the financial year ended was Tk 5 lakh 65 thousand 83 crores. Out of this, in the last month of June, Tk 1 lakh 45 thousand 780 crore were spent at an unusual speed.
Analysis of the report shows that the lowest expenditure in the first 11 months of the financial year (July-May) was Tk 20,206 crores in July. And within these 11 months, the highest expenditure was Tk 64,824 crores in last May. If we calculate the average of 11 months, it can be seen that the average expenditure during this time was a little more than Tk 38,118 crore. In the last month of June, the expenditure of more than Tk 1 lakh 45 thousand crore is quite surprising. Experts and economists have expressed doubt whether the government institutions of the country have the ability to spend this huge amount of money within a month.
Their comment in this regard is that apart from disrupting the achievement of expenditure objectives, it also raises major questions about its transparency and quality.
Despite this huge amount of expenditure in the last month, the total expenditure of the government in the management and development sector in the last financial year stood at 86.15 percent of the revised allocation. According to the information of the Finance Department, a total allocation of Tk 6 lakh 71 thousand 23 crore was kept for the management and development sector in the budget of the financial year 2022-23. Out of this, Tk 4 lakh 11 thousand 407 crores have been allocated to the management sector. Tk 2 lakh 59 thousand 616 crores have been allocated for the development sector. Later, by revising the budget, the allocation to the management sector was increased to Tk 4 lakh 14 thousand 283 crores.
The allocation for the development sector has been reduced to Tk 2 lakh 41 thousand 607 crore. Through this, in the revised budget, the amount of allocated expenditure in the management and development sector has decreased to Tk 6 lakh 55 thousand 890 crores. Tk 3 lakh 61 thousand 21 crores have been spent in the management sector of the entire financial year. Tk 2 lakh 4 thousand 62 crores have been spent in the development sector. Through this, the total expenditure of the government in the management and development sector in the financial year 2022-23 stands at Tk 5 lakh 65 thousand 83 crores.
Mohammad Muslim Chowdhury, the former finance secretary of the government and the former auditor-general and controller, told the media, “Scientific methods are not followed in government procurement. As a result, when the lump sum payment is made in June, it increases the government’s borrowing costs. Many times, it is seen that the loan has already been taken but the cost at that time is less than that. However, interest has to be paid against it. In this case a proper procurement plan should be formulated as well as monitoring should be strengthened. This will reduce the government’s borrowing costs and stay within a framework.
As seen in the government’s monthly expenditure review during the current financial year, the pace of expenditure was sluggish in the first half of the fiscal year. And in the second half the expenditure increased gradually and reached the highest in the last month of the financial year. Out of the government’s expenditure of Tk 1 lakh 45 thousand 780 crore in June, Tk 52,496 crore has been spent in the management sector and Tk 93,284 crore has been spent in the development sector.
Those related to the Ministry of Finance say that apart from the development expenditure, there are some programs in the operational expenditure where additional money is spent at the end of the financial year. Grants are disbursed in June to some autonomous bodies. Interest on Government Employees Provident Fund is paid in June. Operating expenses also include some capital expenses. The cost of government purchases is also high at this time. Also, in terms of development expenses, more money is always paid in June.
Economist and former caretaker government finance and planning advisor ABM Md. Azizul Islam told the media, “Usually what is seen in our country is that we sit for the whole year and rush to spend at the end of the financial year. As a result, the funds for which they are spent are not utilized properly. Especially in development projects, money is often given without doing any work, so that it can be shown that the money has been spent. If not, the money allocation may be reduced in the future. Timely spending here and the purpose for which it is being spent should be properly implemented.’
A large part of the government’s operating sector expenditure goes towards debt interest payments and salaries of government employees. In the last completed financial year 2022-23, the interest payment sector has spent Tk 83,944 crores. In the revised budget of this financial year, Tk 90,013 crores have been allocated to this sector. Whereas in the announced budget, its amount was Tk 80,375 crores. 93.3 percent of the revised target was spent on interest payments in FY 2022-23.
In the last financial year, Tk 76,660 crore were spent on salaries and allowances. In the revised budget, the allocation for this sector was Tk 1 lakh 6 thousand 355 crores. In the announced budget, its amount was Tk 1 lakh 16 thousand 828 crores. In the last fiscal year, 72.1 percent of the revised allocation was spent on salaries and allowances.
Former secretary of the government and former chairman of the National Board of Revenue (NBR) Mohammad Abdul Majid said, “This happens because of the overall weakness of macroeconomic management. Irrelevant spending and not keeping up with income is a sign of weakness. On the one hand the revenue income will continue to flow in and on the other hand the expenditure will continue to flow from it. But it can be seen that the revenue is not being received or not, but it is being spent. And while spending this, bills are not paid or are paid late. Because these bills are withheld due to non-arrival of revenue. These accumulated expenses are shown as expenses for the months of May and June.
This is the rainy season. It should not cost so much at that time. But as unpaid bills of previous months are paid at this time, overall expenditure is higher during this period. Moreover, there is a long wait for the revision of the budget. As a result, the pace of expenditure increases after the revised budget. But if the bills were paid on time, there would have been a continuity in government expenditure.
Pointing out that there is a problem at the beginning of the budget formulation, he further said, “The budget should be formulated by analyzing and calculating the actual cost of the previous year’s budget and the growth of the next year.” But it appears that a large budget is being given without accounting for these. As a result, in the last quarter of the financial year, it is not being spent. It is then modified and reduced in size. The problem in this case is that if it was known in advance that a sector would not need all the money allocated, then it could have been allocated to other sectors that needed allocation. On the other hand, budget deficit remains due to expenditure being higher than income. And the government has to borrow to meet this deficit. It also increases the government’s expenditure on loan interest.
In the budget of 2022-23 fiscal year, the total revenue collection target was fixed at Tk 4 lakh 33 thousand 5 crore. Later, in the revised budget, this target was slightly reduced to Tk 4 lakh 33 thousand crores. However, in the 12 months of the financial year under discussion, the revenue collection has been Tk 3 lakh 65 thousand 862 crores. Out of this, the target was to collect revenue of Tk 3 lakh 70 thousand crore through NBR. Tk 3 lakh 19 thousand 684 crore has been collected. In this case, the deficit stands at Tk 50,316 crores.
In all, the revenue of Tk 3 lakh 65 thousand 862 crore has been collected in the financial year 2022-23, which is 84.5 percent of the revised target. At this time, the tax-GDP ratio stood at 7.38 percent, which was 7.54 percent in the previous financial year.
When asked about the overall issue, Planning Minister MA Mannan told the media, “There is always less expenditure in the beginning. It then increases and peaks in June. That’s right. We rely on reports from the Implementation Monitoring and Evaluation Department (IMED) to ensure that efficiency and quality are maintained in expenditure. Also, media news is also helpful for us. However, IMED is not able to play its role as expected due to lack of manpower. We are trying to increase their capacity.
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