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09 December 2021

Business Insider Bangladesh
Rangdhonu Group

Govt wants to spend 17% of GDP in next two fiscals: Document

BI Desk || BusinessInsider

Published: 16:59, 24 November 2021  
Govt wants to spend 17% of GDP in next two fiscals: Document

Representational Image. UNB file photo.


The government has projected its expenditure to remain at 17 percent of the GDP in the next two fiscal years defying the adverse impact of coronavirus, that had caused spending to contract.

In the current 2021-22 fiscal, the government expenditure has been set at 17.3 percent of the GDP while it was 17.4 percent of the GDP in the revised budget of the 2020-21 fiscal, according to an official statistics obtained by UNB.

According to the official budgetary document, government expenditure was 13.9 percent of GDP in 2015-16 fiscal and declined to 13.6 percent in 2016-17 fiscal.

In the following fiscal, the rate increased to 14.3 per cent of the GDP whereas the rate shot to 15.4 percent in the 2018-19 fiscal. But in the 2019-20 fiscal it slightly went down to 14.9 percent of the GDP.

As per the document, with successful implementation of reforms in Public Financial Management, government expenditure has been increasing since 2015-16 fiscal.

"In the medium term (2023-24), the government intends to pursue a moderate consolidation path to keep budget deficit within a sustainable limit," the document said.

It mentioned that due to the outbreak of coronavirus, the government has changed its spending priority to expand healthcare and provide stimulus programmes to achieve desired economic recovery.

On the other hand, as per the document, the growth rate of nominal government expenditure fluctuated between 6 and 21 per cent over the 2015-16 fiscal to 2019-20 fiscal.

The average growth rate of nominal government expenditure over 2015-16 fiscal to 2019-20 fiscal was 14.8 per cent, respectively.

As per the revised budget of 2020-21 fiscal, nominal growth of government expenditure is 29.7 per cent, which is the highest in the last six financial years since 2015-16 fiscal.

In 2015-16 fiscal it was 14.9 percent, in 2016-17 fiscal it was 11.9 percent, in 2017-18 fiscal it was 19.8 percent.

In 2018-19 fiscal the rate was 21.6 per cent, but it dropped drastically to 6.1 per cent in 2019-20 fiscal due to the COVID-19 pandemic that forced the whole economic activities to a standstill in the last three months of that fiscal.

But in the revised budget the government pushed forward the rate to a massive 29.7 percent.

In the budget of the current 2021-22 fiscal the rate has been fixed at 11.9 percent.

The document mentioned that the government for the medium term (2023-24 fiscal) period has set the target to 12.5 per cent while the rate has been fixed at 9.3 per cent for the next 2022-23 fiscal.

"Medium term government expenditure targets have been set by taking the long-term development objectives and the ground reality into consideration," the document stated.


Monetary Policy Stance
Budget 2020-21