Big budget planned to cast safety net wide

The size of the next fiscal year's budget may cross Tk 100,000 crore as the government is planning expenditure increases in different sectors to reduce public sufferings caused by price spiral of food and other commodities.
Sources say the finance ministry has already drafted a preliminary estimate of Tk 100,800 crore for the FY 08-09 with an increase of about Tk 21,186 crore compared to the current fiscal year budget.
The current budget is of Tk 79,614 crore, which excludes Bangladesh Petroleum Corporation (BPC) liabilities of Tk 7,523 crore. "That means the next fiscal spending may increase by 27 percent compared to the current budget," says a source.
The sources say the size of the next budget is going to increase due mainly to additional payments against planned salary hikes of government employees and non-government schoolteachers, interest payments, increased subsidies and safety net programmes for the poor.
The revenue budget would be expanded to Tk 75,800 crore in the next fiscal from the current Tk 53,114 crore, the sources add.
The current fiscal budget allocated Tk 4,760 crore for procurement of 23 lakh tonnes of rice and wheat from local and international markets, though the target could not be achieved.
The sources say the government is going to set a target to procure 34 lakh tonnes of rice and wheat from local and international market in the coming fiscal.
"Fifteen lakh tonnes of rice will be procured during the current Boro season and it will require Tk 4,200 crore," says a source.
He adds that gross expenditure in food budget would be doubled as the government is increasing the target procurement and prices of food grains are also higher.
The current fiscal has allocated Tk 16,670 crore for subsidies, salaries of non-government schoolteachers, and pension and gratuity of government employees, which will be increased to Tk 25,170 crore.
"The government is considering price adjustment of petroleum products to reduce losses, but even after the adjustment the petroleum products need subsidy due to price increase in the international market," says a BPC official.
The government also plans to raise the funds for the safety net programmes for the poor to Tk 9,000 crore. The revised budget of the current fiscal year allocated around Tk 3,700 crore for this purpose.
The expansion of the safety net programme funds will be to the tune of around 1 percent of the GDP (gross domestic product) compared to the last budget, sources say.
The government hopes the expansion will secure new employment to 20 lakh poor people, who will receive cash payments for undertaking local public work projects.
Besides, the government is working towards creating work opportunities for the poor for at least nine months in a year. The next budget may allocate Tk 2,000 crore for this purpose, the sources add.
Turning to the safety net programmes, the finance ministry sources say the size of existing programmes like Food For Work (FFW), Vulnerable Group Feeding (VGF), Vulnerable Group Development (VGD), Test Relief (TR) and Open Market Sales (OMS) will be expanded so that more people can be benefited.
The government will allocate around 24 lakh tonnes of rice against the safety net programmes, which is 16 lakh tonnes in the current fiscal year, they say.
The government is going to increase the salaries of its employees by around 20 percent in the next fiscal year considering the price hike of essentials.
"Preliminary estimation shows the government will have to spend Tk 3,210 crore in addition to its current spending in the next budget to increase salaries of public sector employees," a finance ministry official told The Daily Star.
The current budget has allocated Tk 13,510 crore for the pay and allowances of government employees and it would be increased to Tk 16,720 crore in next budget.
The plan to increase the salaries can be seen as a result of the recent price hike of food and other commodities, which has subsequently raised the overall living expenses.
On increased payment of interest, sources say the government expenditure for payment against loans is going to reach Tk 12,910 crore in the next fiscal from the current spending of Tk 10,790 crore.
Eighty-seven percent of the spending against payment interest would be for domestic loans.
As of June 2007, total outstanding loan of Bangladesh stands at Tk 230,800 crore. Of the amount, domestic debt is Tk 88,000 crore and foreign debt is Tk 142,800 crore.
"Interest rate of domestic loans is higher than the foreign loans. That's why we will have to spend a huge money though amount of domestic debt is small in comparison to the foreign loans," said a finance ministry official.
About the Annual Development Programme (ADP) spending in the next fiscal, sources say shifting from the usual trend of increasing the ADP allocation, the plan is to lower the budget and keep it in a realistic figure.
The next fiscal may allocate Tk 25,000 crore for the ADP, which is Tk 1,500 crore less than the original allocation of the current budget.
The planning ministry officials say in the first nine months of the current fiscal only 36 percent of the original ADP has been implemented.