Subsidy spending on the decline
Subsidy spending by the government last fiscal year was 19.37 percent less than the allocation in the revised budget, according to finance ministry statistics.
The expenditure went down to Tk 22,097 crore as the government is gradually reducing such costs to contain its budgetary burden, a finance ministry official said.
Power, food, export and jute are some of the sectors that saw a fall in subsidy expenditure, he said.
The export sector got an allocation of Tk 4,000 crore, but as export growth was low this time, the allocation for the sector could not be utilised fully.
In the revised budget, the allocation for food subsidy was Tk 1,620 crore, but a portion of the amount remained unspent due to lower prices of rice.
In recent times, the highest subsidy expenditure was in the power and energy sectors. These subsidies will be brought down through price adjustment, the official said. As part of the plan, the prices of power and gas were hiked in September.
The allocation for power sector subsidy was Tk 9,000 crore last fiscal year, but the expenditure was less than the allocation.
The official said the monthly subsidy cost in the power sector almost halved to Tk 200 crore in the current fiscal year compared to that in the previous year.
“We remain committed to containing the cost of subsidies and replacing them with targeted transfer to the poor, while making the fiscal cost of subsidy more transparent,” the finance ministry said in a report sent to the International Monetary Fund.
Though petroleum prices dropped significantly in the international markets, the government has so far not adjusted domestic fuel prices, the report said.
This has allowed Bangladesh Petroleum Corporation (BPC) to make operating profits, which will be used to lower its debt. As a result, BPC's external short-term financing for importing fuel has fallen much, the report added.
If the gap in oil prices between the local and international markets exceeds Tk 10, the government will make price adjustment, it said.
Bangladesh government will continue to make regular budgetary transfers to cover the cost of energy-related and fertiliser subsidies incurred by state-owned enterprises.
In the current fiscal year, the allocation for subsidy is Tk 24,572 crore, but the finance ministry official said the spending will not cross Tk 20,000 crore.
From fiscal 2010-11, the government's expenditure on subsidy started rising due to an increase in fuel prices in the international markets, and also because of buying electricity from quick-rental power plants.
In fiscal 2009-10, the government spent Tk 9,601 crore on subsidy, which soared to Tk 17,470 crore in the following year.
The highest spending on subsidy was in fiscal 2012-13 which was Tk 33,566 crore. Since then the amount has been going down gradually.
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