As a result of austerity measures taken because of the dollar crisis, the implementation of the Annual Development Programme (ADP) in the just concluded FY2022-23 decreased by 8.58 percentage points compared to the previous fiscal year.
On the other hand, the implementation progress of last June alone is almost 5.46 percentage points less than the previous year’s same month.
Meanwhile, the government's bank loans at the end of FY23 have almost doubled compared to FY2021-22, despite the decline in ADP implementation. The government has become dependent on bank loans as revenue is not increasing compared to the target.
As most of these loans were taken from Bangladesh Bank (BB), the inflow of new money into the economy is increasing and that is fuelling inflation, economists have said.
FY23 saw a lower ADP implementation rate compared to FY22. In the outgoing fiscal year, the government managed to spend 84.16 per cent of the allotted Tk 1,99,099.03 crore. But in FY22, it had spent 92.74 per cent of the allotted Tk 2,03,648.49 crore.
Compared to the implementation of June of FY22, the last fiscal fell short by 5.46 percentage points as well, according to the data from the Implementation Monitoring and Evaluation Division (IMED) of the Planning Ministry.
In June of FY22, the government managed to spend Tk 61,260.59 crore. It was Tk 53,077.14 crore in FY23.
A total of 58 ministries and divisions were allocated Tk 2,36,570.67 crore in the Revised ADP of FY23 to implement 1,686 projects across the country.
The Foreign Ministry, which was allotted Tk 91 crore to implement seven projects, performed lowest with zero per cent implementation.
The low-performance list was also dominated by the Finance Ministry’s Internal Resources Division with 25.22 per cent implementation. It had seven projects to complete with an allocation of Tk 101 crore.
The Land Ministry stood third from the bottom with 39.60 per cent implementation. It had Tk 431.72 crore to spend on seven projects.
The Bangladesh Election Commission Secretariat, Food Ministry, Public Security Division, Medical Education and Family Welfare Division, and Health Services Division are among some other government entities that performed poorly in the past fiscal year compared to others.
In the last national budget, the government allocated Tk 1,53,06,609 lakh for projects. The implementation ministries and divisions managed to spend 81.77 per cent of the allocation. Tk 74,50,000 lakh came as project grants and the implementation rate of this was 90.40 per cent.
The ministries and divisions allocated Tk 8,99,458 lakh from their fund and the expenditure was 73.30 per cent.
However, Health Services Division, Local Government Division, Medical Education and Family Welfare Division and the Prime Minister’s Office did not spend any money from the self-fund, although they had allocations.
Talking to The Business Post, Policy Research Institute Executive Director Ahsan H Mansur said that the main reason behind the low ADP implementation rate in FY23 is the government's austerity policy.
“I think the implementation rate will be lower next year,” he said.
Regarding the low implementation in the health and education sectors, he said, “Spending in these sectors is low mainly due to a lack of money. On the other hand, the bigger the projects in the power or communication sectors, the higher the fund release. That results in higher implementation.”
Of the top 15 ministries and divisions that had the largest ADP allocations, Energy and Mineral Resources Division had the highest expenditure of 103 per cent, followed by the Bridges Division with 96.67 per cent, Power Division with 93.06 per cent, Road Transport and Highways Division 91.14 per cent, and 90 per cent each for Railways Ministry and Science and Technology Ministry.
Health Services Division again lagged here with 68.20 per cent expenditure.
Bank borrowing and revenue income
Even though the implementation of ADP has decreased, government spending in other areas including administration has not stopped. Economists believe that the government is borrowing a large amount of money from banks to meet the budget deficit as the desired revenue income is not increasing to meet the deficit.
The government – in a bid to meet the budget deficit – borrowed a record Tk 1,24,123 crore from the banking sector during FY23.
Of the amount, it borrowed 80 per cent — Tk 98,826 crore — from the central bank and the rest 20 per cent — Tk 25,296 crore — from commercial banks as they have been facing a tight liquidity situation, as per the latest BB data.
In this context, Ahsan said that the government does not have enough money to meet the budget expenditure. Despite the low implementation of ADP, the government borrowed a large amount from the banking system due to less revenue collection in line with the target.
“On the other hand, the government is borrowing money from the central bank as commercial banks are in a liquidity crunch, which is equivalent to printing money and it’s pushed up inflationary pressure,” he said.
He continued that the government meets administrative expenses by printing money and this money is spent on interest payments, subsidies and social security programmes as well.
The National Board of Revenue (NBR) collected Tk 3,25,272 crore as revenue in FY23, registering an 8.12 per cent growth compared to FY22.
However, revenue collection was Tk 44,727 crore less than its target in FY23. The NBR attained 87.91 per cent of its revenue target of Tk 3,70,000 crore, according to provisional data.
