Budget implementation rate drops by 10.58pc
Published : Monday, 12 April, 2021 at 12:00 AM Count : 150
Budget implementation rate has decreased by 10.58 percent in the first six months (July to December) in the current fiscal year (2020-21) compared to the last financial year due to the outbreak of coronavirus.
Due to the slow pace of development projects, the implementation rate of the Annual Development Programme (ADP) has dropped by about 25 percent.
The revenue could not be collected at the desired rate compared to the expected target. However, the collection rate has increased by 8.6 percent compared to the last fiscal year (2019-20).
According to the Finance Ministry sources, the projects slowed down under the impact of the coronavirus. This has affected the overall expenditure.
In June, a budget of Tk 5.68 lakh crore for the fiscal year 2020-21 was announced in the parliament. The Finance Department prepared a report on the progress rate in the middle of the fiscal year (July-December).
It has been seen that Tk 1.41 lakh crore was spent during this time while Tk 1.58 lakh crore was spent during last fiscal year.
Sources said the expenditure came down to Tk 16.748 crore compared to the last fiscal year during the same period.
In such a situation, Tk 4.26 lakh crore will have to be spent in the next six months. As such, Tk 71,000 crore has to be spent every month. Spending huge sums of money will pose a challenge to the government.
In the last six months, the average expenditure has been Tk23 lakh crore per month. It is almost impossible to spend Tk71,000 crore per month.
The ADP implementation in July-January of the fiscal 2020-2021 dropped to a 12-year low with no pace in development works although more than half of the fiscal year has elapsed.
According to the IMED report, only 28.45 percent of the ADP allocation was spent on development projects in the first seven months of this fiscal year, down from 32 percent in the last fiscal year. In the fiscal 2018-19, the rate was 34.43 percent.
The rate of ADP implementation has not come down so much in any year since the fiscal 2009-10.
Dr Zahid Hossain, former lead economist in Dhaka office of the World Bank said general holiday was not in this fiscal year due to Covid-19. This big budget was presented knowing that Covid-19 would have a serious impact on the economy.
Later, a set of plans was taken to boost the economic situation. These include direct cash assistance to the extremely poor, food aid and incentive packages for traders.
But for various reasons, the government has failed to implement these initiatives. "That's why we have to make big cut in the middle of the year," he said.
Officials said the overall progress in ADP implementation remained slow as the construction of mega projects, including Padma Bridge, Dhaka Metro Rail, and activities of ministries and divisions with higher allocations were almost suspended in the first quarter of the fiscal year.
In most cases, the development activities are yet to get full momentum amid an economic slowdown due to the coronavirus outbreak and the fear of the second wave of infection, they said.
They hoped that the progress would get pace once the COVID-19 situation comes under control as the country is set to start vaccination from early February.
The target of the Annual Development Programme (ADP) is Tk2.5 lakh crore.
According to sources in the National Board of Revenue (NBR), the outbreak of lockdown or coronavirus could lead to another slowdown in trade and commerce. This will reduce the desired pace of revenue collection from internal sources. Fearing a major revenue deficit, the total revenue target has been slashed by Tk44,000 crore.
As per the NBR, revenue collection from July to January of the current (2020-21) financial year has been Tk 1.32 lakh crore. The collection target was Tk 1.89 lakh crore.
In other words, in 6 months (July-January) the revenue deficit has been Tk 36,742 crore. As a percentage, the amount collected is less than 17.80 percent.
According to Finance Division sources, the Finance Ministry will hold a meeting soon to review overall situation, because the prevalence of coronavirus has already increased. If this situation continues, it will be difficult to achieve the growth targets set at the beginning of the financial year.
At the same time, achieving the targets of implementing development projects and revenue collection will face challenges. As a result, size of the budget for current financial year will further be reduced.