Big budget on cards: Tk 1,13,000cr budget chalked out for next FY with higher allocation for social safety net, subsidies, development

The government is likely to chalk out a big budget of Tk 1,13,000 crore for the next fiscal year, to allocate more money for social safety nets, subsidies, development programmes, and additional salaries for government staff.

It is likely to be 13 percent bigger than the current fiscal’s original budget of Tk 99,962 crore, and about 18 percent bigger than the probable revised budget.

The estimated size of the next budget has been set by the finance ministry, taking into account the demands of different ministries and probable revenue earnings.

Economists however are saying, considering the growth of demand in the country, and the sizes of the neighbouring countries’ budgets, the estimated next budget of Bangladesh is not too big.

But, if the implementation efficiency and quality are taken into consideration, economists have enough doubts about how much implemental the new budget will be.

They say the budget should be discussed in the parliament every three months to improve the quality of its implementation.

Sources said according to the primary projection, revenue expenditure might be Tk 82,700 crore in the next budget while the original outlay in the current fiscal is Tk 74,360 crore.

Development expenditure in the next budget might be Tk 30,500 crore which is Tk 25,600 crore in the current budget.

Finance ministry sources said in the next budget the new pay scale, about to be recommended by the pay commission, will be implemented in phases. Budgetary allocation for salaries and allowances of government staff will increase substantially.

Due to the global economic recession there is a plan to keep more stimulus packages in the next year’s budget than this year’s. The stimulus package in the current fiscal is

Tk 3,424 crore, which might go up to Tk 5,000 crore to Tk 6,000 crore in the next budget, depending on the local fallout of the global recession.

Government expenditure for poverty elimination and social safety nets will also increase. The finance minister said on Sunday that allocation for Vulnerable Group Feeding (VGF) will increase from 2.25 lakh metric ton to 5.54 lakh metric ton in the next budget. Test Relief (TR) will be raised from 2 lakh metric ton to 3.66 lakh metric ton,

and 100-day Employment Generation Programme will also be implemented in a larger scale resulting in more allocation for it too.

Usually 60 percent of the revenue expenditure goes to meet the pay and allowances of government staff, interest payments, and salaries and allowances of the staff of non-government educational institutions, despite an increase in allocations for subsidies and social safety nets.

Those expenditures are also likely to see an increase in the next budget due to a probable increase in government borrowing and a probable hike in salaries and allowances in general.

Finance and planning adviser to a former caretaker government and a former chairman of the Public Expenditure Review Commission M Hafizuddin Khan said, “Our budget is passed year after year in a traditional way, and the spending is also done in the same fashion.”

The parliamentary discussions on budgets also lack any constructive discourse, he added.

Khan said, however big a budget might be, to get a good result from it, basic changes are necessary in the process of its formulation and implementation.

He said parliamentary standing committees should discuss in detail the budgetary allocations for ministries, and allocations for projects should be determined on the basis of the discussions, to ensure quality.

Moreover, the parliament should discuss expenditures by the ministries and the problems in implementing the projects in detail every three months, he added saying, under the medium term budgetary framework several ministries have been given separate budgets over the last few years, but no good result from those ministries is visible.

He also said the government should review the recommendations of the Public Expenditure Review Commission and see whether those could be implemented.

Research Director of Bangladesh Institute of Development Studies (BIDS) Zaid Bakht said, “The size of our budget is usually 15 percent of the GDP, only the last fiscal year’s budget was 17 percent. In many neighbouring countries the budgets are 20 percent of their GDPs.”

“Taking that into consideration it does not seem to me that the next fiscal year’s budget is big. There is a need for public investment in the country now. But the questions are whether it will be possible to mobilise the resources for the bigger expenditure, and whether the quality of the expenditure will be maintained,” he added.

Bakht said if resources cannot be gathered to meet the expenditure, government borrowing from banks will increase, and excessive borrowing might send inflation upwards, and a credit crunch for the private sector might also be inevitable.

He said with a large-scale development expenditure the possibility of resource wastage also increases. Taking many projects and giving small allocations usually result in only 30 to 35 percent of the development expenditure budget being spent in the first 8 months of a fiscal year. As a result in the remaining four months the remaining amount is usually spent in a hurry and wastage occurs, he cautioned.

Source: The Daily Star, 21 April 2009


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