Bigger budgets, slower execution

Hasibul Aman

16 May, 2019 12:00 AM printer

Bangladesh’s national budget is getting larger every year driven by a buoyant economy for a broad-based development vision but its execution could not cope with the expectations.  

Lack in the country’s implementation capacity and low revenues are mainly blamed for the slowing budget execution rates in recent years, according to analysts who see the budget “ambitious.”

Immediately after taking office, the Awami League government for the first time crossed Tk 1 trillion threshold by announcing a Tk 1.13 trillion budget which is going to rise nearly five times to Tk 5.23 trillion next year.

But the execution rate slumped to around 70 per cent last fiscal year whereas the rate was as high as 97 per cent nine years ago.

The slowing trend is also expected to continue in the current 2018-19 fiscal year as the half-yearly total budget implementation was only 27.51 per cent while ADP advanced 47.22 per cent in first nine months, official data suggest.

“Although the budget size is getting bigger every year, the implementation rate is going down. In terms of the quality of the budget and its execution trend, the budget can be termed ambitious,” commented Dr Mirza AB Azizul Islam, former adviser to a caretaker government.

Administrative capacity and awareness should be increased for better budget implementation.

Besides, failure in implementing the full ADP, not getting foreign assistance in line the expectations, delay in fund disbursement by development partners, lack of skilled manpower are also blamed for the poor show.

During the AL government’s regime, the highest execution rate of 97.06 per cent was achieved in 2010-11FY with Tk1.28 trillion expenditure against Tk 1.32 crore budget.

But it came down to 93.18 per cent in the following year when Tk 1.52 trillion spending had been finally possible out of Tk 1.63 trillion budget outlay.

In 2012-13 fiscal year, the budget size was Tk 1.89 trillion but Tk 1.74 trillion or 90.76 per cent could be spent at the year end.

In FY13-14, budget size crossed Tk 2 trillion mark to Tk 2.16 trillion, but the execution rate slipped further to 84.59 per cent with Tk 1.88 crore spending.   

Similarly, execution rate fell further to 81.59 per cent in FY15 when Tk 2 trillion could be spent out of Tk 2.5 trillion budget for the year.

In FY16 budget, implementation rate slipped to 78.50 per cent with Tk 2.31 trillion spending, while execution rate slipped to 76 per cent in FY17.

In the last fiscal year, the original budget size was slightly over Tk 4 trillion which was later slashed by nearly Tk 29,000 crore. Finally, 70 per cent of the budget could be possible to implement.    

This year the budget is going to be curtailed by Tk 21,900 crore to Tk 4.42 trillion from Tk 4.64 trillion. Even after this cut, execution of the whole budget won’t be possible, finance ministry officials said.

NBR data suggest that during the first nine months of the current fiscal year revenue shortfall was Tk 50,425 crore although it saw a modest 7.1 per cent year-on-year increase.

Recently, the tax regulator downsized its yearly revenue target by Tk 15,370 crore to Tk 280,630 crore from Tk 296,000 core original target.

In the last 10 years, Bangladesh’s average tax-GDP ratio was 10.3 per cent, which is 19.6 per cent in India and Nepal 19.6 per cent. In developed countries, the average tax-GDP ratio is 35.8 per cent.