Budget to be cut after slow expenditure

The government is likely to slash the budget for the fiscal year in light of the slow spending in the first six months.

Between July and December last year, Tk 76,798 crore was exhausted from the Tk 250,506 crore-budget for fiscal 2014-15.

The six-month spending sum is also a 0.1 percent year-on-year decline. At this point in fiscal 2013-14, total expenditure had soared 20.3 percent year-on-year.

The reason for the decline, a finance ministry official says, is a drop in subsidy outlay owing to the slump in petroleum prices in the global market.

In the budget, Tk 26,053 crore was set aside for subsidies, but in the first six months only Tk 4,403 crore was spent.

The official said much of the Tk 9,400 crore allocation for fuel and power subsidies is likely to remain unspent this time.

In keeping with the downward trend, non-development expenditure too dropped in the first six months, by 2.6 percent year-on-year to Tk 59,789 crore.

In the same period last fiscal year, it increased 20.2 percent year-on-year to Tk 61,387 crore.

However, development expenditure rose 10 percent year-on-year in the July-December period to Tk 17,009 crore. Finance Minister AMA Muhith will sit with the fiscal coordination council in the first week of April, during which a decision will be taken on the amount to be reduced from the budget, said the official.

Around Tk 15,000 crore may be slashed from the revised budget estimate, he said.

Due to the messy political situation, GDP growth forecast will also be revised down to around 6.9 percent from the original 7.3 percent.

“Taking the overall situation into consideration, a slight change may be brought to the 7.3 percent projection for GDP growth,” Muhith said in parliament early this month.