Photo: Messenger
About 40 per cent of the allocation in the budget for the upcoming fiscal year 2024-25 will be spent on salaries and allowances of government employees, subsidies, and loan interest payments.
This will make it difficult to increase the allocation for social safety net, health, and education sectors. According to the plan of the Ministry of Finance, the government can allocate Tk 3 lakh 14 thousand 700 crore to these three sectors from the total budget of Tk 7 lakh 96 thousand 900 crore.
According to sources at the Ministry of Finance, Tk 1 lakh 16 thousand crore will be spent on interests, Tk 1 lakh 11 thousand crore on subsidies and incentives, and Tk 87 thousand 700 crore on salaries and allowances of government employees. Over the past five years, expenditure on wages, pensions, subsidies, and interests has increased compared to revenue, narrowing the government's revenue margin.
Finance ministry officials said the government is unable to increase allocations for safety net programmes, healthcare, and education due to the paucity of resources. Government expenditure on interest payments both domestically and abroad is increasing every year. Interest rates have increased in recent years and the finance ministry expects further rise.
In the current financial year, the government allocated Tk 94,376 crore for interest payments, which for the first time exceeded Tk 1 lakh crore in the revised budget. In this situation, the Ministry of Finance is going to increase the allocation by 23 per cent in the next financial year.
An official of the Ministry of Finance, who did not want to be named, told The Daily Messenger that the government's treasury bond interest rate hike and currency devaluation could increase the allocation for interest payments during next year's budget revision.
According to the data of the Ministry of Finance, interest paid during the July-January period of the current financial year was Tk 60 thousand 555 crore, which is 26 per cent more than the previous year. Payments to the domestic sector increased by 15 per cent to Tk 51,213 crore. Interest payments on foreign loans have increased three times. The cost of funds raised through the sale of Treasury bonds is rising. Interest expenses have also increased.
In the current fiscal year, the government has allocated Tk 1,11,000 crore for the subsidy and incentive sector. An official of the Ministry of Finance said that although the final allocation is not fixed, next year's allocation is likely to be close to the current fiscal year's allocation. Before 2019, the government did not give subsidy to the power sector for several years. From the fiscal year 2019-20 to the fiscal year 2021-22, the government's subsidy in this sector was between Tk 7,000 crore and Tk 11,000 crore. In the financial year 2022-23, it has increased to Tk 22,000 crore.
In the current financial year, the subsidy in the power sector has stood at Tk 35,000 crore. The government may keep the amount of subsidy the same in the next budget as well. In the last two years, the government has increased the price of electricity, gas, and fuel several times, but the subsidy expenditure in this sector has not decreased due to huge arrears, said the official. However, the government is planning to gradually reduce the subsidy in the power sector. Due to this, the price of electricity may increase four to five times a year, he added.
In the current fiscal year, the allocation for the salaries and allowances of government employees is Tk 80 thousand 463 crore. Officials said that this allocation will increase by 9 per cent in the next financial year. However, if pension and gratuity are included, the expenditure in this sector will exceed Tk 1 lakh crore.
Although the government's expenditure on various priority sectors has increased over the years, it has not been able to allocate to the health and education sectors in line with the 8th Five Year Plan. Due to the paucity of resources, the government is not able to increase the allocation to the social security sector at a significant rate. Although the Ministry of Social Welfare has said to increase the monthly allowance under several safety net schemes, the Ministry of Finance has not increased the allocation due to resource crunch.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), told The Daily Messenger, “If indiscriminate spending eats up most of the budgetary allocation, there is not much left. Wages, subsidies, and interest costs are increasing massively. It has taken the government nearly 10 years to get to this point. It will take another 10 years to get out of it.”
However, he thinks that the country has to solve this problem and take initiatives for reforms. In that case, he suggested reducing internal debt, subsidies, and other unnecessary expenditure as well as increasing revenue.
Meanwhile, there is no major change in key sectors like education and health. The allocation in ADP for the current fiscal year 2023-2024 in education and health sector is Tk 29 thousand 889 crore 12 lakh and Tk 16 thousand 204 crore 4 lakh, respectively, which is 11.36 per cent and 6.16 per cent of the total ADP respectively.
Although there is a slight increase in ADP in the education and health sectors in the next financial year as compared to the current financial year, as well as in terms of money, as a share of total ADP, economists said that this increase is very small.
According to them, Bangladesh is now transitioning from a less developed country to a developing country.
The government is also developing physical infrastructure. In this situation, it is necessary to create skilled manpower for the use of these physical infrastructures. And timely education will create this manpower. The health sector will protect it. For this, development in these two important sectors is very important. Big investment is required in these two sectors. For this, higher allocations are needed in education and health sectors.
In this regard, Dr Zaid Bakht, the former director of Bangladesh Institute of Development Studies (BIDS), told The Daily Messenger that the education sector needs more allocation. “We need to invest in the education sector, and we also need to increase the investment in the health sector. The increase in amount in the next financial year 2024-25 is nominal.”
Messenger/Disha
