The implementation of the national budget in the outgoing financial year has gone off track because of slow revenue growth and struggle by government agencies to improve development expenditure and service delivery.
The revenue growth in financial year 2018-19 is the slowest in recent years that has overshadowed impressive export performance and remittance inflow, said experts and finance division officials.
The development expenditure has increased slightly but that is not enough to lift the overall budget implementation to a satisfactory level, they told New Age in the past week.
Other budgetary projections, including private sector investment, are not even close to target, said Centre for Policy Dialogue distinguished fellow Debapriya Bhattacharya.
The independent think tank projected the revenue shortfall at Tk 85,000 crore in FY19 amid 7.11 per cent revenue growth in the first nine months of the financial year against the annual target of 36 per cent.
Debapriya Bhattacharya noted that revenue mobilisation had not matched the demands of accelerating economic growth and also undermined the momentum gained in 2015-17.
The current budget was placed by the then finance minister AMA Muhith in June 2018. New finance minister AHM Mustafa Kamal has been looking after its implementation since January 2019.
Although the slow revenue growth has become a headache to the financial policymakers they are happy with the remittance inflow and export growth as the two vital indicators maintain a double-digit growth.
Overall export earnings in July-April period grew by 11.61 per cent to $33.93 billion from $30.40 billion in the same period of FY18 while remittance inflow rose by 10 per cent in July-February in FY19 compared with that of the same period of FY18.
Development expenditure increased by 2.21 percentage points in the first 10 months of FY19 to 54.63 per cent from 52.42 per cent during the same period of FY18.
To increase spending in the annual development programme, the finance division has further eased the fund release process waiving the provision of approval from the division and the line ministry for the last two quarters of a financial year for the government-financed projects.
ADP implementation remains sluggish in the current financial year due to slow progress during the national election as well as the traditional problems in land acquisition and delay in procurement.
The government has already slashed the size of annual development programme by Tk 8,000 crore to Tk 1.65 lakh crore from Tk 1.73 lakh crore.
It is likely to cut Tk 22,031 crore from the original national expenditure outlay of Tk 4,64,573 crore and fix the revised budget at Tk 4,42,542 crore for FY19.
Former caretaker government adviser Mirza Azizul Islam said that the government even failed to achieve the revised target by big margins in the past few years.
According to finance division documents, the original budget of Tk 3,40,605 crore in 2016-17 was revised to Tk 3,17,174 crore. The actual implementation released one year later showed that the total expenditure was Tk 2,69,499 crore.
In 2015-16, the actual expenditure was Tk 2,38,433 crore against the revised target of Tk 2,64,565 crore and original projection of Tk 2,95,100 crore.
Mirza Azizul Islam blamed the ambitious budgetary projections and lack of capacity of the government officials for the big gaps in implementation rates.
Big differences in projection and implementation on many other indicators, including private investment, and deficit financing are contrary to prudent financial management.
Between FY09 and FY18, average discrepancy between original budget and the actual expenditure was 14.5 per cent and stood at 23.9 per cent in FY18, highest since FY01, according to a CPD report released in April 2019.
This discrepancy is higher for development component compared to the non-development component of public expenditure.
South Asian Network for Economic Modelling executive director Selim Raihan suggested that monitoring system should be strengthened to overcome the discrepancies.
News Courtesy: www.newagebd.net