IMPLICATIONS ON PUBLIC INVESTMENT

Expenditure on Interest rate

Expenditure of government includes both the purchase of final goods and services, and transfer payments. Expenditures help government to undertake key functions, such as national defense and education subsidies, interest payment, social security and welfare, health, agriculture, public administration, local government and rural development, transportation and communication, industrial, energy and power, culture and religious affairs, and pension. The implementation of ADP is also important for increasing the productive capacity of the country.

Successful implementation of development projects depends on full utilisation of Annual Development Program budget. According to Implementation Monitoring and Evaluation Division (IMED), the ministries and agencies of government spent only 27 per cent of Tk. 658.72 billion Annual Development Programme (ADP) in the first half of the current fiscal year, where 33 percent funds would come from foreign assistance. As a consequence, implementation of the annual development programme (ADP) suffered a setback while private credit growth and imports slowing down in the first six months of the current fiscal year.

In fiscal year 2013-14, real expenditure of ADP on human resource as well as agriculture and rural development has declined to 23 percent and 25.4 percent from 23.5 percent and 30.9 percent respectively from that of previous fiscal year. On the other hand, comparatively higher ADP allocation on power sector is 17.2 percent as a percent of total allocation in FY 2013-14 compared to previous fiscal year. Communication infrastructure got higher ADP allocation for the Padma Bridge and this is 7.4 percentages higher than that of previous fiscal year.

Furthermore, revised allocation as well as actual expenditure has been decreasing compared to proposed allocation of ADP for over the years. In FY 2012-13, proposed allocation was Tk. 55000 crore and in revised allocation decreased by Tk. 2634 crore. Also in FY 201314, the proposed ADP allocation given Tk. 65870 crore and there is plan of government to lowered Tk. 54000 crore whereas actual expenditure up to January, 2014 is Tk. 16748.4 crore.

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