Govt runs budget surplus in first quarter

Although the government went for a budget deficit for fiscal 2015-16, it was running a surplus of Tk 1,157 crore in the first quarter due to low expenditure.

A year earlier, it was running a deficit of Tk 1,737 crore. The disclosure came yesterday at a meeting of the fiscal coordination council chaired by Finance Minister AMA Muhith. 

The finance division presented a report on the country's macro-economic situation and budget implementation at the meeting.

In fiscal 2015-16, the budget deficit was estimated to be Tk 86,657 crore, which is 5 percent of the country's gross domestic product. The GDP is the monetary value of all the finished goods and services produced within a country's border in a specific time period. The deficit is to be met by borrowing from foreign and local sources.

But in the first three months, the government spent only Tk 37,121 crore, which is only 12.6 percent of the total budget allocation.

During the same period last year, it spent Tk 36,523 crore, which was 14.6 percent of fiscal 2014-15's total allocation.

The reason for the low expenditure was slow implementation of the annual development programme (ADP), said a finance ministry official, who was present at the meeting.

In the first quarter, only 6.7 percent of the total ADP allocation was spent, which is the lowest in four years.

At the meeting, Planning Minister AHM Mustafa Kamal said most of the projects under ADP are ongoing ones, so expenditure should have been high from the start of the fiscal year.

Subsequently, he directed the ministries and divisions to take special care such that project implementation progresses at a good pace and does not stutter at the start of a fiscal year.

It was decided at the meeting that budget revision will take place in December this year instead of March next year.

The budgetary allocation to the ministries and divisions which will fail to spend will be cut down.

Alongside expenditure, the revenue earnings were also lower than the target, which was discussed at length at the meeting.

In the first quarter, the total revenue collection was Tk 38,278 crore, which is 18.4 percent of the target. A year earlier, it was Tk 34,785 crore.

Sources said the new pay-scale would have to be implemented this year and hence the revenue earning has to be boosted promptly.

Increasing revenue earning is challenging and the National Board of Revenue will have to take the initiative, Finance Minister AMA Muhith told the meeting.

The NBR high official told the meeting that they have started a special drive that should help them meet the target set.

Other than budget implementation, the state of export-import, remittance inflow, inflation, GDP growth and investment during the first quarter was also discussed, the finance ministry official said.

A projection was made in the meeting that the targeted GDP growth of 7 percent will be achieved since the macroeconomic situation is good.

However, the low export growth and slow private sector investment poses some threats.

But the finance division informed the meeting that investment will pick up in near future thanks to the low inflation and interest rates.

A special initiative has to be taken though to ensure hassle-free and adequate supply of gas and electricity to investors. 

The meeting also highlighted that this year's targets for GDP growth and inflation would not be revised.

In the first three months, export earnings were over $10 billion, which will help in achieving the $32 billion target for the whole year, Commerce Minister Tofail Ahmed said at the meeting.

Remittance also showed a positive trend. 

Manpower export in the ten months of 2015 stood at 4.3 lakh people. It will cross five lakh by the year-end.

Besides, Malaysia has agreed to take in 15 lakh Bangladeshi workers, and arrangements will be made to send them through the private sector, it was mentioned in the meeting.

Japan and Saudi Arabia too will take in workers from Bangladesh. However, it was informed that the two countries will train Bangladeshis as per their requirements to employ them.

Given the low price of fuel and other consumer goods in the international market and good agricultural production, inflation was low in the first quarter.

It was forecasted in the meeting that the trend of low inflation would continue.

The finance division said the Bangladesh Bank's cautious monetary policy has helped reduce inflation.