The Financial Express

Interest, subsidy to eat up almost 30pc of revenue budget

| Updated: June 08, 2018 20:21:14

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Interest, subsidy to eat up almost 30pc of revenue budget

Interest payment and subsidy will eat up almost 30 per cent of the revenue budget for the next fiscal year (FY).

Finance Minister AMA Muhith proposed in his budget speech on Thursday an allocation of Tk 513.40 billion for interest payment in FY 2018-19.

The amount is 18 per cent of the operating budget of the government.

In the budget for the current fiscal the allocation was TK 379.20 billion.

On the other hand, allocations for payment of subsidy and incentives have been doubled to Tk 332.05 billion from the current fiscal's Tk 173.28 billion.

The proposed amount in subsidy and incentives is 11.7 per cent of the operating expenditure.

On the rise in allocation for interest payment, Centre for Policy Dialogue (CPD) Distinguished Fellow Dr Debapriya Bhattacharya said the government's dependence on savings instruments will enhance the burden on the banking sector.

"The efforts to ease the lending rates will face hurdles due to such a step," he told media in an instant reaction to the budget on Thursday.

An analysis of the interest payment shows that allocations for interest payment on foreign loans have been raised to Tk 29.63 billion from Tk 25.16 billion.

The allocation for interest payment on Treasury bonds is set at Tk 12.44 billion and for the Floating Rate Interest Bond at Tk 11.11 billion.

Allocations for payment of profits against national savings tools have been raised to Tk 29.18 billion from Tk 16.65 billion.

The allocation for interest on provident funds has been raised to Tk 50 billion from Tk 40 billion.

Allocations against 'other subsidies' also mark a significant rise in the proposed budget - from Tk 41 billion to TK 151 billion.

Commenting on the issue of the subsidy, economist Dr Qazi Kholiquzzaman Ahmed said the rise in the agriculture subsidy would benefit the economy.

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