South Asian Media Net
Tk 946cr surplus on less spending
Wednesday, March 17,2010
DHAKA: The first six months of the current fiscal year saw a budgetary surplus of Tk 946 crore, due to low expenditure, increased foreign assistance, and high revenue income.
The information was revealed by Finance Minister AMA Muhith yesterday when he was reporting to the parliament the fiscal year's first six months' trends in government income and expenditure, with an analysis of the state of the economy.
It was the first time in the country's history that a government submitted a half-yearly budgetary report to the parliament.
The report said the corresponding period of the last fiscal year saw a budget deficit of Tk 6,129 crore, and the estimated total deficit for the current fiscal year was fixed at Tk 34,358 crore in the annual budget.
The government has Tk 12,000 crore cash in hand even after repaying bank loans of a huge amount of Tk 11,108 crore in cash as well during the period.
Mentioning that the placing of the half-yearly budgetary report to the parliament was the first of its kind in the country, the finance minister said through the move the government conformed to the Public Finance and Budget Management Act 2009. He hoped that the move will ensure the government's budgetary accountability.
While presenting the report, he referred to the budget he placed in the House in June last year saying, "The budget was not based on emotions or over ambition, rather it was prepared in light of the reality, with the resoluteness of our objectives."
"As I am presenting the half-yearly progress report to the great parliament, I feel that we have been able to live up to our promises," he added.
According to the report, in the first six months of FY 2009-'10 the total revenue collection was Tk 35,553 crore which was 15.7 percent higher on the corresponding period of FY 2008-'09. The total revenue collection target this fiscal year is Tk 79,461 crore, which the finance minister hopes to reach in the remaining months.
He however said the government is considering shortening the list of tax exempted items, for increasing revenue collection.
For quick disposal of tax related litigations, the government is considering setting up a dedicated bench in the High Court, and introduction of alternative dispute resolution, the minister added.
Budgetary spending in the first six months of the current fiscal year was 6.1 percent lower than in the same period of the last fiscal year, according to the report.
In the July-December period of the current fiscal year, expenditure was Tk 34,607 crore out of the total budget of Tk 113,819 crore for the entire year. The expenditure during the same period of the last fiscal year was Tk 36,868 crore.
Explaining the reasons for low budgetary spending, the report said the government spent less on farm subsidy, payment of interest, food procurement, and employment programmes.
In the July-December period of the current fiscal year, Bangladesh Petroleum Corporation also did not spend money on subsidy. Moreover, the additional spending due to the declaration of the new pay scale for government officials was not included in the first six months' accounting.
Development expenditure however increased in the first six months of the current fiscal year on the corresponding period of the last fiscal year.
The expenditure for annual development programme increased by 42.2 percent to Tk 8,807 crore compared to the last fiscal year's corresponding period.
The size of ADP is Tk 30,500 crore for the entirety of the current fiscal year, of which the government could spend 29 percent in the first six months.
The finance minister said the progress in ADP implementation was significantly higher than other years', due to the present government's initiatives, its dedication to work, and efficient financial management.
In the first six months of the current fiscal year inflow of foreign assistance increased by 368 percent to Tk 5,161 crore, while in the corresponding period of the last fiscal year it was Tk 1,101 crore.
The finance minister in his speech described the current state of the country's macroeconomy including the export-import situation, and inflation.
Muhith said in June 2009 the point-to-point inflation was 2.3 percent, which increased to 8.5 percent in December of the same year.
Under the impacts of price hikes on the international market, and due to increase in remittance flow and foreign currency reserves, the inflation showed an upward trend, he said adding, several measures were put in place including unhindered supply of commodities, to contain inflation.
Bangladesh Institute of Development Studies (BIDS) Research Director Zaid Bakht said the surplus in the budget has both good and bad sides. The good side is that the revenue earning is close to the target. The bad side however is that the government could not spend the money, he added saying, as a result the people were deprived of the benefits they could have got.
Bakht said implementation of ADP was higher than in the last year's corresponding period, but it was still only 29 percent of the government target set in the annual budget.
He also said sales of government savings instruments soared significantly, contributing to the high implementation of ADP, one of the bad sides of which is that in the future the government expenditure on account of payments of interests will go up.