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Govt moves to cut budget size
REJAUL KARIM BYRON
The interim government is going to curtail its expenditure focusing on the budget for 2024-25 in order to keep fiscal pressure within its control, contain inflation and prevent foreign currency reserves from falling further.
Through a circular, the finance ministry has put a stop to all types of spending for vehicle purchases, land acquisitions, and foreign tours.
Considering necessity, participation in programmes abroad can be allowed. But in that case, concerned officials would have to take permission from the Ministry of Finance.
The government has already initiated a process to prepare a revised budget, for which the circular was issued yesterday. By next January, the size of the revised budget will be finalised.
All budgetary allocations will be cancelled for new buildings except for those in the education, health and agriculture sectors, the circular said.
If over 70 percent of the construction of a building has been completed, the allocation can stay in effect.
The Ministry of Finance told all ministries that the revised budget must be limited to the proposed budget and demand for extra allocation would not be met.
It also ordered an end to fund allocations for unnecessary projects.
However, in case of foreign aid-funded projects, the government ordered to keep the same amount in domestic funds, wherever applicable, so that these projects do not face any problem in implementation.
The circular said electricity, fuel and lubricant allocations would be trimmed to around 80 percent of the existing budget.
Officials from the ministry said the World Bank and International Monetary Fund (IMF) had informed that rising inflation and erosion of foreign currency reserves cannot be tackled solely by a contractionary monetary policy.
Thomas Helbling, deputy director for the Asia Pacific Department of the IMF, earlier this month said fiscal policy should support monetary policy by tightening overall expenses.
“At the same time, they need to rebalance fiscal policy to maintain space to support the poor and support development,” he added.
Inflation rose to 10.87 percent in October amid soaring food prices, especially of staples like rice and vegetables.
The foreign exchange reserves of Bangladesh dropped to $18.44 billion on November 13, according to Bangladesh Bank data.
Already, the high-ups of the interim government directed that all politically biased and prestige projects will have to be dropped.
The Ministry of Planning and line ministries are already working in tune with this.
The finance ministry will set the size of the revised budget by January on the basis of support received from development partners.