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The interim government plans to launch an initiative for eliminating unnecessary projects, taken under political consideration in the budget for fiscal year 2024-25 during the Awami League regime.
Besides, the incumbent government also wants to eliminate initiatives taken by the Awami League government for providing benefits to the then ruling party leaders and activists.
Interim government officials believe that through these initiatives, FY25 budget size can be reduced by around Tk 1 lakh crore, sources from the finance and planning ministries told The Business Post.
Advisers to the interim government had said by reducing wasteful expenditure from the budget, the existing pressure on the financial sector can be eased by reducing the budget deficit.
The move will also help stabilise foreign exchange reserves, rein in inflation.
Responding to queries, Finance Division officials said the interim government has a plan in this regard, but it has not been finalised as yet. The matter is still at the homework stage.
Moreover, the current situation is unstable, which in turn has weakened revenue collection. Under such circumstances, the government has no other option but to reduce expenditures.
Officials concerned say the Ministry of Planning will do the groundwork in this regard. Later, there will be a meeting between the ministries of planning and finance. After that, after meetings at different levels, the matter will go to the final phase.
Sources from the ministries of finance and planning say the interim government’s first option to reduce the budget size is to eliminate weak and unnecessary development projects.
The government will then eliminate every project or sector launched to provide benefits under political considerations.
Moreover, the government has already halted the projects of former lawmakers. This will save Tk 2,257 crore from the budget. Lawmakers used to get an allocation of Tk 20 crore for implementation of election promises.
This allocation was provided under the priority project titled “Village Infrastructure Development.”
The interim government has learned that many lawmakers not only benefited themselves from this allocation, but provided benefits to their respective relatives as well, instead of prioritising people-oriented projects.
Relevant officials say there is little room for budget cuts to be made from the revenue budget, so most of the cuts are made from the Annual Development Programme (ADP).
Although most ministries and divisions usually do not spend a large part of their annual budget allocation.
The government usually revises the national budget in the second half of a fiscal year, particularly in March. However, the interim government is planning to amend the budget before this timeframe.
Therefore, the ministries of finance and planning have already started their homework to identify sectors that can be cut from the budget.
According to Finance Division statistics, the national budget for the fiscal year 2023 was Tk 6,78,064 crore, of which Tk 5,63,921 crore was spent.
The Awami League government, which was ousted by a mass uprising led by Boishommo Birodhi Chhatra Andolon on August 5, formulated a budget of Tk 7,97,000 crores for FY25. Of the figure, ADP was Tk 2,65,000 crores.
In the current FY, there are 1,326 projects under the ADP. Many of these were included in 2023, but no expenditure has been posted so far.
For example, Tk 17,500 crore has been allocated in the current financial year to 102 projects under the Ministry of Local Government, Rural Development and Cooperatives.
Despite 30 of these projects being new, no expenditure has been recorded so far. In addition, a separate allocation has been kept in the ADP for many new projects awaiting approval in the ECNEC.
Several planning ministry officials say although they were given verbal instructions regarding the cuts in projects approved during the Awami League government, no written instructions have yet been issued in this regard.
So they are waiting for further directives.
If the size of the revised budget for FY25 is reduced by Tk 1 lakh crore, the decrease would be by more than 12.5 per cent from the original budget. The revised budget was reduced by 6.22 per cent compared to the original budget in FY24.
An analysis of the Finance Division data shows that 2.59 per cent of the budget was revised in FY23. The revision rate was between 2 per cent and 4 per cent in the previous financial years as well.
Compared to the original budget, the size of the revised budget has been greatly reduced, but when implementation is taken into consideration, the figures show a huge difference.
