Health and education are set to get the biggest chop in the revised development budget for this fiscal year, when the International Monetary Fund has stipulated more spending in the two sectors as part of its $4.7 billion loan programme.
In the revised budget for fiscal 2022-23, which is scheduled to be approved tomorrow at the meeting of the National Economic Council, the allocation for the health service division is likely to be slashed by 38 percent to Tk 9,780.96 crore.
The budget for the ministry of primary and mass education would be brought down by 32.6 percent to Tk 7,784.68 crore and for the secondary and higher education division by as much as 48 percent to Tk 7,218.33 crore, according to the draft proposal prepared for the meeting.
Overall, the annual development programme would be trimmed by 7.5 percent to Tk 227,566.09 crore, with the foreign-funded projects shouldering the entire chop.
The allocation for foreign-funded projects would be reduced by Tk 18,500 crore or 19.89 percent.
The government has decided to go for an expansionary fiscal policy and hence the government's own funded projects were left untouched in the revision, according to finance ministry officials.
This would revive economic activities and generate employment.
The reason the budgets for the health service division, ministry of primary and mass education and secondary and higher education division are being reduced is their implementation is low, said a finance ministry official requesting anonymity as he is not authorised to speak with media.
In the first seven months of the fiscal year, the health service division has managed to use 11.7 percent of its allocation, the ministry of primary and mass education 15.86 percent and the secondary and higher education division 13.58 percent.
Economists are not in agreement with the government's line of thinking.
The sectors getting the chop in the budget are health and education -- the two areas where the International Monetary Fund has stipulated higher spending as part of its $4.7 billion loan.
"This is going the opposite direction to what the current economic circumstances demand," said Zahid Hussain, a former lead economist of the World Bank's Dhaka office.
The ADP is a formidable weapon in the government's arsenal against the raging dollar crisis and high inflation. But the government wasted it.
As of February 22, foreign currency reserves stood at $32.4 billion, enough to cover about four months' imports, according to data from the Bangladesh Bank.
The average inflation in the first seven months of the fiscal year is upwards of 8 percent, comfortably overshooting the budgetary target.
"The government-financed import-intensive projects must be cut or else, the dollar crisis will not go away."
In fact, it will make the situation worse as more dollars would be needed for imports on the government's own-funded projects, he said.
"We simply can't use foreign funds effectively and speedily. Regrettably, we needed to use the foreign funds the most, which would take away the pressure on reserves. We are doing the opposite," said Ahsan H Mansur, executive director of the Policy Research Institute.
At the same time, to bring down the high inflation, the government-financed projects should have been condensed, Hussain said.
"Those create demand and fan inflation. There is no point in pouring money into the economy -- that money has to enter the production system. Because of the dollar shortage, the economy is stalling. Because of inflation, people cannot buy things. If you bring down inflation, with the same income the people would be able to buy more," he added.
N.B: The Daily Star
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