Non-development spending is expected to increase once again in the revised budget for the current fiscal year, primarily driven by higher expenses on interest payments and subsidies. The allocation of capital support for a new state-owned bank and potential implementation of the Pay Commission’s recommendations are also anticipated to exert additional financial strain.
During the first quarter of FY2024-25, the Finance Division, Economic Relations Division, and agriculture ministry collectively utilized Tk 54,571 crore, representing about 55 percent of the total expenditure. The majority of this expenditure was directed towards interest payments and subsidies, with Tk 31,952 crore allocated solely for interest payments.
Finance Adviser Salehuddin Ahmed is scheduled to convene a meeting on November 10 to evaluate the economy and craft the revised budget in light of the escalating commitments. With national elections slated for mid-February, the government aims to finalize the budget revisions by January.
Following the budget announcement in June, the government raised several allowances amid increasing demands, including a hike in house rent allowances for MPO-listed teachers, contributing approximately Tk 4,000 crore to non-development spending. There is a potential additional cost if the government proceeds with the implementation of the pay commission’s recommendations, expected to be submitted by December.
The upcoming national election is expected to further escalate expenditure, with around Tk 3,000 crore allocated for the Election Commission, with the possibility of increased funding requests. Additionally, the government plans to infuse Tk 20,000 crore in capital into a new bank created by merging five struggling Islamic banks, with an initial transfer of Tk 10,000 crore anticipated this month.
Economist Selim Raihan emphasized the importance of sustained reforms alongside the capital support for the new bank to ensure the effective utilization of public funds. The revised budget guidelines have introduced stricter controls on non-development expenditures to manage the rising demands effectively.
Revenue collection in the first quarter of the fiscal year increased by 17 percent year-on-year to Tk 117,117 crore, reflecting a growth acceleration compared to the previous year. The upcoming revised budget is crucial in providing a clear direction for the next government, ensuring fiscal stability and consistent revenue-expenditure alignment.