The budget is usually revised in March every year, this time, the government wants to revise it in February.
The Finance Division has already started revising the budget, though there is no scope to reduce the budget size, major cuts are being made in projects taken for political purposes during the previous government, said officials.
Despite that, the budget size is unlikely to be reduced much, because a large part of allocations for projects will be spent on outstanding subsidies.
The budget size decrease by up to Tk 70,000 crore.
Sources said that during the Awami League government, unprecedented corruption occurred in the financial sector.
The wounds of the banking sector spread to the entire economy.
After taking office on August 8, the interim administration cut government spending to heal unprecedented wounds in the economy.
However, the Sheikh Hasina government, which fell in a popular uprising after sensing the economic crisis, also took cost cutting measures at different times.
The Covid-19 pandemic that began in 2020, the ongoing Russia-Ukraine war since 2022, and the economic situation in the country has been on the brink of collapse due to widespread irregularities, corruption and bank looting.
For this reason, the government took cost cutting in recent years. In the wake of the protests and political changes in August, business and trade saw a slight downturn.
Again, in order to control prices, customs duties and taxes were waived on several products. Overall, revenue collection has not been good.
In this situation, the interim government strengthened cost cutting initiatives after taking office. This initiative was taken largely out of necessity due to the revenue crisis. In particular, it was decided to eliminate several unnecessary projects taken by the Sheikh Hasina government for political purposes.
At the same time, many projects have been re-evaluated and the expenditure has been reduced. The government is giving priority to economic stability by bringing inflation under control. For this, initiatives have been taken to reduce expenditure in concert with contractionary monetary policy.
The interim administration has taken initiatives at the beginning of the year to reduce government expenditure in view of the global economic situation.
The allocations that can be spent in which sector was determined.
The Ministry of Finance issued another notification on November 16, adding some more restrictions on government expenditure. It says that a maximum of 80 per cent of the money allocated in the operation and development budget can be spent on electricity, petrol, oil, gas and energy sectors.
The purchase of all types of vehicles including motor vehicles, watercraft and aircraft from development and operative budget has been stopped.
However, money can be spent with approval for the replacement of vehicles that are more than 10 years old under the operation budget. Under the operating budget, the expenditure of money allocated for new residential buildings, non-residential buildings and other establishment sectors, except for establishments related to the ministries of education, health and agriculture, will be stopped.
The expenditure of money allocated in the operating budget for the land acquisition sector must be stopped. Although there have been various cost-saving measures in government expenditure, initiatives have been taken to provide dearness allowance to officials and employees this year itself. There is also much criticism about this.
Sources said, the revenue sector is in a slump. According to the provisional estimated of the National Board of Revenue (NBR), the deficit in customs and tax collection during the first four months (July-October) of the current 2024-25 fiscal year was Tk 30,768 crore.
The expenditure on development projects has also decreased.
Cost cutting measures were taken as the implementation of the Annual Development Programme (ADP) has been poor as many contractors close to the Awami League fled.
Compared to the same period of the previous fiscal year, the expenditure during July-November of this fiscal year has been less by Tk 12.5 thousand crore.
The development work that has stalled due to the changed situation after the fall of Hasina government has not yet picked up steam.
Therefore, the Finance Division has estimated that a large part of the money allocated to this sector will remain unused at the end of the fiscal year. The government will provide subsidies on fertilisers and electricity with a part of this money.
For this, the allocation for this sector is being increased by about Tk 75,000 crore in the revised budget. The original budget had allocated Tk 47,000 crore to this sector. After analysing the ADP implementation process, the Finance Ministry believes that about Tk 110,000 crore of the allocation for this sector may remain unused at the end of the fiscal year. There is a plan to pay about Tk 28,000 crore of the remaining money as the arrears of subsidies.
The total allocation this year is Tk 2,78,288 crore. Only Tk 34,214 crore has been spent in five months. The expenditure of Tk 2,44,74 crore in the remaining seven months can be said to be impossible.
As a result, the government financing from the ADP, including Tk 20,000 crore in foreign loans, is decreasing by about Tk 50,000 crore. This information was given the sources of the Planning Ministry, the Economic Relations Division and several related ministries.
