Budget execution rate falls

The government's national budget implementation rate fell significantly in the last one decade mainly due to a lack of efficiency, accountability and capacity and a rise in corruption.

For fiscal 2019-20, the government passed a national budget of Tk 523,190 crore but at the end of the year actual implementation was Tk 415,523 crore.

That means Tk 107,667 crore has been left unimplemented.

Over the last 10 years, the budget implementation rate has mostly been on a downward curve, falling to 79.4 per cent in 2019-20 from 84.3 per cent in the previous year.

Just five years ago, the implementation rate was more than 80 per cent every year and the highest during the decade was 97 per cent in fiscal 2011.

The government should focus on the implementation rate because lower implementation ultimately deprives people of quality services, said Hossain Zillur Rahman, former adviser to a caretaker government.

Salaries and benefits of government officials have been increased by around 50 per cent in the last couple of years with hopes that it will ensure higher efficiency and reduce corruption, he said.

However, a lack of efficiency and rise of corruption among these civil servants are causing the budget implementation rate to drop, he said.

"This is a big concern now," said Rahman, also executive chairman of the Power and Participation Research Centre (PPRC).

The country's leaders should take proper initiatives to increase their efficiency, capacity and reduce corruption in budget implementation, so that people get higher benefits from the government's plans and quality services.

Ministries failing on the implementation the most should be questioned, because without strong accountability the situation will not get better, he added.

The data shows the financial implementation rate, but does not include the quality of the implementation, which is much lower, said Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM).

"There are many reasons for the lower implementation rate but the main reason is low capacity," he said.

"The main problem is that our economy is expanding, demands are rising. However, implementation capacity is in a downward trend," he added.

"If we cannot improve the capacity, the implementation rate would fall at a higher extent in the coming years," said Mujeri, who is also a former director general of the Bangladesh Institute of Development Studies (BIDS).

In that situation, if the government tries to raise the budget artificially then quality of the public service will fall further, he said.

"So, our development journey would be impacted," he warned.

Keeping these in consideration, he recommends taking proper measures immediately and urgently.

The growing gap between target and implementation of public expenditure can be attributed to both poor programming and weak implementation capacity, said Towfiqul Islam Khan, senior research fellow of the Centre for Policy Dialogue (CPD).

Over the years, the finance ministry followed a "business as usual" approach in preparing budgetary allocations without considering ground realities, he said.

It may also be true that the shortfall in revenue collection in recent years has restrained the government in terms of spending, he said.

"Even this year, we can recall that in this fiscal year, within just one month of approving the budget in the national parliament, the Finance Division advised that only 70 per cent of the budgetary allocation from government fund against ADP projects could be spent," he said.

"Indeed, over the years, the announced fiscal framework of the national budget has lost its credibility," he said.

"For Bangladesh, public expenditure-GDP ratio should be around 20-22 per cent. Unfortunately, we are unable to go beyond 15 per cent," Khan added.