1/4th of revenue goes to interests

The budgetary allocation for the next fiscal under the head exceeds the total salary of public servants, finds Abdur Rahim Harmachi

bdnews24.com
Published : 9 June 2012, 09:49 AM
Updated : 9 June 2012, 09:49 AM
Abdur Rahim Harmachi
bdnews24.com Chief Economics Correspondent
Dhaka, Jun 9 (bdnews24.com) – For the first time in Bangladesh's history, the government will spend a fourth of its total revenue towards repayment of interests in the next fiscal.
Incidentally, the allocated amount exceeds the total salary of public servants.
According to the budget Finance Minister A M A Muhith proposed in parliament on Thursday, the government has set a revenue target of Tk 994.96 billion.
Of the amount, Tk 233.02 billion, which is 23.42 percent of the total expenses and 12.2 percent of the total budget, will be spent towards repayment of interests. The figure is Tk 53.07 billion more than the target set in the budget for the outgoing 2011-12 fiscal and Tk 35.06 billion than the reviewed target.
Of the due interests to be paid in the next fiscal, Tk 216.08 will be spent to repay loans taken from domestic sources and Tk 16.98 billion from foreign sources.
In the 2010-11 fiscal, the government had spent Tk 156.23 billion to pay interests. In the current fiscal, the allocation under this head was Tk 17.097 billion. Later, the amount was revised to Tk 197.96 billion.
The target to collect revenue in the new fiscal has been set at Tk 1.3967 trillion.
A B Mirza Azizul Islam, former finance advisor to the caretaker government, has expressed concern over the huge money to pay interests.
"The government borrowed more from domestic sources this fiscal. It had borrowed a large amount in the last fiscal, too," he said.
He also suggested scrapping plans to borrow any further. "Our sufferings will continue if the dependence on loans in budgets is not reduced."
Expenses
In the budget for the next fiscal, the government has allocated Tk 220.9 billion to pay salaries of the public servants.
In the outgoing fiscal, the allocation was Tk 216.4 billion and later revised downwards to Tk 215.22 billion.
The target to spend for goods and services is Tk 130.33 billion. It was Tk 117.72 billion for the outgoing fiscal.
The finance minister has proposed to allocate Tk 386.27 billion for subsidies in the next fiscal. The amount was Tk 346.42 billion in the current fiscal and then revised to Tk 376.53 billion.
Of the total revenue to be spent in the next fiscal, Tk 15.94 billion will be spent in cash.
The total spending has increased by over Tk 220 billion in two years.
In the 2010-11 fiscal, the government spent Tk 774.67 billion of the collected revenue, in the current year, the total spending was Tk 918.23 billion and in the next fiscal, the government plans to spend Tk 990.96 billion.
Loans
The government has set a target to borrow Tk 334.84 billion from domestic sources to meet the Tk 520-billion shortfall in the Tk 1.9-trillion budget.
The loans to be taken from domestic sources include Tk 230 billion from banks.
The government also plans to get Tk 74 billion through savings certificates.
Net loans from the foreign sources in the next fiscal has been visualised at Tk 203.98 billion, including Tk 78.58 billion taken as loans and interests previously and Tk 125.40 billion in new loans.
The budget for the current fiscal had a target to borrow Tk 189.57 billion from banks, but the figure was revised to Tk 291.15 billion. The budget deficit was Tk 452.04 billion, but it was revised to Tk 462.28 billion.
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