The government has moved to reduce its current expenditure with a focus on increasing capital expenditure to stimulate economic growth and offset the impact of COVID-19 pandemic, according to an official document.
Public expenditure broadly includes all government consumption, investment and transfer payments. Current expenditure and capital expenditure are the two major categories of budget allocation, said the document recently obtained by UNB.
Current expenditure consists of wages and salaries paid to the government employees, purchase of goods and services, subsidy and transfer payments and interest paid for domestic and foreign loans.
Expenditures of account of 'food account operation' also includes into current expenditure category.
On the other hand, capital expenditure comprises addition to and creation of productive assets. The Annual Development Programme (ADP) and non-ADP capital expenditure are the two major categories of capital formation through government expenditures.
Moreover, capital expenditure includes loans and advances, development programme financed from revenue budget, non-ADP project, and non-ADP FFW (Food For Work) and transfer.
Considering the context of developing countries like Bangladesh, expanding the size of current expenditure is important for improving the quality of public service delivery and meeting the demand for maintaining the existing infrastructure network.
On the other hand, growth of capital expenditure is desirable to meet the growing demand for public investment.
In this situation it is critical for Bangladesh to arrive at an optimum mix of current and capital expenditures through budgetary process that will help stimulate economic growth and push the economy on a higher growth path.
According to the government document, the current expenditure of the government has been projected at 52.9 per cent of the total budget in medium term basis (2023-24 fiscal) while it is set at 54.2 per cent of the total budget in the running 2021-22 fiscal.
It said the projection for 2022-23 fiscal is 53.2 per cent of the total budget while it was 56.6 per cent, 57.4 per cent, 56.7 per cent, 57.3 per cent, 61.6 per cent and 59.9 per cent in 2020-21, 2019-20, 2018-19, 2017-18, 2016-17 and 2015-16 fiscals respectively.
On the other hand, the capital expenditure for 2023-24 fiscal has been projected at 47.1 per cent of the total budget raising from 45.8 per cent of the running 2021-22 fiscal with 46.8 per cent in 2022-23 fiscal.
The document mentioned that the capital expenditure for 2015-16, 2016-17, 2017-18, 2018-19, 2019-20 and 2020-21 fiscals were 40.1 per cent, 38.4 per cent, 42.7 per cent, 43.3 per cent, 42.6 per cent and 43.4 per cent respectively.
It means that the capital spending as a percentage of total expenditure was on the declining trend from fiscal 2015-16 to fiscal 2016-17. Whereas, ADP was only 4.3 per cent GDP in 2014-15, it was 5.4 per cent of the GDP in 2019-20 fiscal. The revised estimate of ADP in 2020-21 fiscal stood at 6.4 per cent of the GDP, it said.
The document said that the current expenditure has been hovering around 8 per cent of GDP during 2015-16 fiscal to 2019-20 fiscal.
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For the 2023-24 fiscal the projection of the current expenditure is 9 per cent of the GDP. The ratio is same for the 2022-23 fiscal while it is 9.5 per cent of the GDP for the running 2021-22 fiscal.
In 2020-21 fiscal, 2019-20 fiscal, 2018-19 fiscal, 2017-18 fiscal, 2016-17 fiscal and 2015-16 fiscal it was 9.9 per cent, 8.5 per cent, 8.7 per cent, 8.3 per cent, 8.4 per cent and 8.3 per cent respectively, as per the document.