Four major government bodies have spent just 16 % of allocated subsidies during the first quarter of FY2014-15, thanks to the abnormal situation of prices in the international energy and food markets, officials said.
The disbursement of subsidies by the Power Development Board, the Bangladesh Petroleum Corporation, the Ministry of Agriculture and Bangladesh Bank, associated with the usually subsidy-hungry power, fuel, food and export sectors, was low in the first quarter.
Officials said another reason for the slow spending was the regular prices hikes taken by the Bangladesh Energy Regulatory Commission (BERC).
“We do not care if the agriculture ministry or other agencies slash fertiliser prices as long as it is in keeping with our commitments to the International Monetary Fund (IMF),” an official said.
Bangladesh is currently under an IMF extended credit facility programme which is supposed to end in July next year.
Finance minister AMA Muhith last week said donors frequently discussed subsidies and the misuse of subsidies, but they amount to just two percent of the budget.
“We hope the amount of subsidy remains within limits by the end of the fiscal year,” the finance minister said.
The BERC yesterday proposed an upward price adjustment from January 1, 2015 of 40% for gas prices and 18.12% for bulk power prices, varying by consumer category.
The fuel oil price is now below US$100 per barrel in the global market, hovering between US$81 and US$86, and food prices are also stable in the international market.
According to the latest data from the Finance Division, Tk4,223cr in subsidies was disbursed from July to September, representing 15.96 % of the allocated subsidy of Tk26,453cr for FY2014-15.
The highest disbursement of subsidies was Tk1,750cr from a total of Tk3,135cr allocated as export subsidies.
The Finance Division has so far released agriculture subsidies worth Tk1,083cr from the allocated amount of Tk9,000 for the current fiscal year.
Some Tk790cr of Tk7,000cr was disbursed as power subsidies. According to data from the Finance Division, Tk600cr in fuel subsidies was disbursed from an allocation of Tk2,800cr.
The subsidy allocation for FY2014-15 is Tk26,453cr, down from Tk32,354cr set aside last fiscal year.