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CHAPTER 4
GOVERNMENT SPENDING, SECTORAL
PRIORITIES AND DEBT MANAGEMENT
Outline of the Chapter
• Public Sector Outlays
• Medium-Term Outlook of Government Spending
• Recurrent and Capital Expenditure
• Trends and Medium-Term Outlook of Recurrent Expenditure
• Trend and Medium-Term Outlook of Capital Expenditure
• Deficit Financing and Debt Sustainability
• Debt Profile
• Medium Term Outlook of Debt Stock
Public Sector Outlays
38.4
13.1
33.1
58.5
28.8
24.3
46.8 45.1
38.5
20.7
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Govt. Expenditure as Percentage of GDP in 2022
Medium-Term Outlook of Government Spending
Total Govt. Expenditure as Percentage of GDP
11.6 12.2
13.3 13 13 13.1
14.9 15.2 15.4
16.2
0
2
4
6
8
10
12
14
16
18 FY17
FY18
FY19
FY20
FY21
FY22
FY23
rev.
FY24
proj.
FY25
proj.
FY26
proj.
Composition of Govt. Expenditure and Their Trend
55.5 55.6
56.7
57.9
59.4 59.1
57.3
44.5 44.4
43.3
42.1
40.6 40.9
42.7
35
40
45
50
55
60
65
FY18 FY19 FY20 FY21 FY22 FY23 FY24
%
of
Total
Expenditure
Recurrent Expenditure Capital Expenditure
Major Heads
of
Recurrent
Expenditure
Interest
Payments
Subsidies,
Transfers &
Fiscal
Incentives
Goods &
Services
Pay &
Allowances
• Depends on the financing mix
of external and domestic
sources
• Currently more than 90% is
for domestic debt
All government
payments in exchange
for goods and services
used to produce market
and nonmarket goods
and services
• Rationalization of subsidy by allocating more
resources in livelihood support programs
• Decreasing the subsidy on energy
• Transfer payments for households or non-profit
institutions serving households
• Fiscal incentives for promotion of export,
remittance, agriculture etc.
• Constant efforts to
rationalize this exp.
• EFT makes the payment
system robust and free
from unseen leakages.
Trend of Pay & Allowances and Goods & Services
14.9
13.6 13.4 13.4
12.1
11.1
10.6
7.3 7.3
6.9 6.6
6.1 5.9 5.8
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
FY18 FY19 FY20 FY21 FY22 FY23 FY24
As
%
of
Total
Exp.
Pay & Allowances Goods & Services Log. (Pay & Allowances) Log. (Goods & Services)
Trend of Subsidies, Transfers & Incentives
Items FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Actual Revised
Cash Loan and Subsidy
Percent of Total Exp. 1.66 3.02 2.66 5.23 4.98 4.35 6.25 8.07
Percent of GDP 0.19 0.35 0.32 0.69 0.65 0.57 0.82 1.20
Fiscal Incentives
Percent of Total Exp. 2.98 3.01 3.02 5.16 3.97 4.84 6.24 2.98
Percent of GDP 0.34 0.37 0.40 0.67 0.52 0.63 0.93 0.34
Total of Subsidies, Transfers & Incentives
Percent of Total Exp. 4.64 6.03 5.68 10.39 8.95 9.19 12.49 11.05
Percent of GDP 0.53 0.72 0.72 1.36 1.17 1.2 1.75 1.54
Trend of Interest Payments
0
2
4
6
8
10
12
14
16
18
FY17 FY18 FY19 FY20 FY21 FY22 FY23 rev.
As
%
of
Total
Expenditure
Domestic Interest payment Foreign Interest payment
Medium-Term Outlook of Capital Expenditure and ADP
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26
Actual Revised Budget Projection
5.42
5.89 5.65 5.49 5.30 6.09 6.50 6.41 6.68
1,107.0
1,483.8
1,670.0
2,011.9 1,976.4
2,099.8
2,275.7
841.0
1,195.4
1,472.9 1,507.8
1,604.0
1,860.6
1,460.2 8
-
500.0
1,000.0
1,500.0
2,000.0
2,500.0
FY17 FY18 FY19 FY20 FY21 FY22 FY23
In
Billion
Taka
ADP Allocation Vs. Implementation
ADP Revised Allocation ADP Implementation
Capital Expenditure (as % of GDP)
Sectoral Priorities
Agriculture
Power and Energy
Transport and Communication
Social Security and Welfare
Education, Science and Technology
Local Government and Rural Development
Protecting Lives and Strengthen Healthcare
Deficit Financing and Debt Strategy
430.4
203.7
350
200 180 191.4 190.3
0
100
200
300
400
500
0
500
1000
1500
2000
FY21 FY22 FY23
budget
FY23
revised
FY24 FY25 FY26
NSC
External
and
domestic
NSC External Domestic
Domestic Financing
• In the medium term, borrowing from domestic sources will be stable at 2.9 percent of the GDP
External Financing
• Financing from external sources will remain steady at approximately 2.1 percent of the GDP
Cost of Financing & Implicit Interest Rate Movement
15.4
13.5
14.4
11.8
0.9
1.7
0
5
10
15
20
FY 21 FY 22 FY 23 FY 24 FY 25 FY 26
As
%
of
Total
Exp
Total Domestic External
7%
6%
10%
9%
1%
2%
0%
1%
1%
2%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
FY21 FY22 FY23 FY24 FY25 FY26
External
Overall
&
Domestic
Overall Domestic External
Implicit Interest Rate
Cost of Financing
Medium Term Outlook of Debt Stock
Indicators Actual Actual Budget Revised Estimate Projection
FY 21 FY 22 FY 23 FY 23 FY 24 FY 25 FY 26
Total Debt 11443 13390 15778 15697 18329 21180 24388
(32.4) (33.7) (35.5) (35.1) (36.6) (37.6) (38.5)
Domestic 7239 8479 9974 9917 11393 13071 14972
(20.5) (21.3) (22.4) (22.2) (22.8) (23.2) (23.6)
{63.3} {63.3} {63.2} {63.2} {62.2} {61.7} {61.4}
External 4204 4911 5804 5780 6936 8109 9415
11.9 12.4 13.0 12.9 13.9 14.4 14.8
{36.7} {36.7} {36.8} {36.8} {37.8} {38.3} {38.6}
Source: Finance Division; Figure in ( ) indicates percent of GDP and { } indicates percent of total debt stock
External Debt Currency Mix & Redemption Profile
USD
50%
Euro
15%
JPY
21%
Pound Sterling
3%
RMB
9%
Others
2%
1,419 1,527
2,103
2,383 2,457 2,553
0
500
1000
1500
2000
2500
3000
FY21 FY22 FY23 FY24 FY25 FY26
Million
USD
Currency Mix
 Around 50 percent of the total external
debt is denominated in US dollars.
 Other significant currencies include the
Japanese yen and the euro.
Redemption Profile
At the end of FY22, the government paid
back USD 1.5 billion which is expected to
rise to USD 2.1 billion in FY23 and projected
to be USD 2.6 billion by the end of FY26.
MTMPS Chapter 4.pptx
MTMPS Chapter 4.pptx

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MTMPS Chapter 4.pptx

  • 1. CHAPTER 4 GOVERNMENT SPENDING, SECTORAL PRIORITIES AND DEBT MANAGEMENT
  • 2. Outline of the Chapter • Public Sector Outlays • Medium-Term Outlook of Government Spending • Recurrent and Capital Expenditure • Trends and Medium-Term Outlook of Recurrent Expenditure • Trend and Medium-Term Outlook of Capital Expenditure • Deficit Financing and Debt Sustainability • Debt Profile • Medium Term Outlook of Debt Stock
  • 3. Public Sector Outlays 38.4 13.1 33.1 58.5 28.8 24.3 46.8 45.1 38.5 20.7 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 Govt. Expenditure as Percentage of GDP in 2022
  • 4. Medium-Term Outlook of Government Spending Total Govt. Expenditure as Percentage of GDP 11.6 12.2 13.3 13 13 13.1 14.9 15.2 15.4 16.2 0 2 4 6 8 10 12 14 16 18 FY17 FY18 FY19 FY20 FY21 FY22 FY23 rev. FY24 proj. FY25 proj. FY26 proj.
  • 5. Composition of Govt. Expenditure and Their Trend 55.5 55.6 56.7 57.9 59.4 59.1 57.3 44.5 44.4 43.3 42.1 40.6 40.9 42.7 35 40 45 50 55 60 65 FY18 FY19 FY20 FY21 FY22 FY23 FY24 % of Total Expenditure Recurrent Expenditure Capital Expenditure
  • 6. Major Heads of Recurrent Expenditure Interest Payments Subsidies, Transfers & Fiscal Incentives Goods & Services Pay & Allowances • Depends on the financing mix of external and domestic sources • Currently more than 90% is for domestic debt All government payments in exchange for goods and services used to produce market and nonmarket goods and services • Rationalization of subsidy by allocating more resources in livelihood support programs • Decreasing the subsidy on energy • Transfer payments for households or non-profit institutions serving households • Fiscal incentives for promotion of export, remittance, agriculture etc. • Constant efforts to rationalize this exp. • EFT makes the payment system robust and free from unseen leakages.
  • 7. Trend of Pay & Allowances and Goods & Services 14.9 13.6 13.4 13.4 12.1 11.1 10.6 7.3 7.3 6.9 6.6 6.1 5.9 5.8 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 FY18 FY19 FY20 FY21 FY22 FY23 FY24 As % of Total Exp. Pay & Allowances Goods & Services Log. (Pay & Allowances) Log. (Goods & Services)
  • 8. Trend of Subsidies, Transfers & Incentives Items FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Actual Revised Cash Loan and Subsidy Percent of Total Exp. 1.66 3.02 2.66 5.23 4.98 4.35 6.25 8.07 Percent of GDP 0.19 0.35 0.32 0.69 0.65 0.57 0.82 1.20 Fiscal Incentives Percent of Total Exp. 2.98 3.01 3.02 5.16 3.97 4.84 6.24 2.98 Percent of GDP 0.34 0.37 0.40 0.67 0.52 0.63 0.93 0.34 Total of Subsidies, Transfers & Incentives Percent of Total Exp. 4.64 6.03 5.68 10.39 8.95 9.19 12.49 11.05 Percent of GDP 0.53 0.72 0.72 1.36 1.17 1.2 1.75 1.54
  • 9. Trend of Interest Payments 0 2 4 6 8 10 12 14 16 18 FY17 FY18 FY19 FY20 FY21 FY22 FY23 rev. As % of Total Expenditure Domestic Interest payment Foreign Interest payment
  • 10. Medium-Term Outlook of Capital Expenditure and ADP FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 Actual Revised Budget Projection 5.42 5.89 5.65 5.49 5.30 6.09 6.50 6.41 6.68 1,107.0 1,483.8 1,670.0 2,011.9 1,976.4 2,099.8 2,275.7 841.0 1,195.4 1,472.9 1,507.8 1,604.0 1,860.6 1,460.2 8 - 500.0 1,000.0 1,500.0 2,000.0 2,500.0 FY17 FY18 FY19 FY20 FY21 FY22 FY23 In Billion Taka ADP Allocation Vs. Implementation ADP Revised Allocation ADP Implementation Capital Expenditure (as % of GDP)
  • 11. Sectoral Priorities Agriculture Power and Energy Transport and Communication Social Security and Welfare Education, Science and Technology Local Government and Rural Development Protecting Lives and Strengthen Healthcare
  • 12. Deficit Financing and Debt Strategy 430.4 203.7 350 200 180 191.4 190.3 0 100 200 300 400 500 0 500 1000 1500 2000 FY21 FY22 FY23 budget FY23 revised FY24 FY25 FY26 NSC External and domestic NSC External Domestic Domestic Financing • In the medium term, borrowing from domestic sources will be stable at 2.9 percent of the GDP External Financing • Financing from external sources will remain steady at approximately 2.1 percent of the GDP
  • 13. Cost of Financing & Implicit Interest Rate Movement 15.4 13.5 14.4 11.8 0.9 1.7 0 5 10 15 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 As % of Total Exp Total Domestic External 7% 6% 10% 9% 1% 2% 0% 1% 1% 2% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% FY21 FY22 FY23 FY24 FY25 FY26 External Overall & Domestic Overall Domestic External Implicit Interest Rate Cost of Financing
  • 14. Medium Term Outlook of Debt Stock Indicators Actual Actual Budget Revised Estimate Projection FY 21 FY 22 FY 23 FY 23 FY 24 FY 25 FY 26 Total Debt 11443 13390 15778 15697 18329 21180 24388 (32.4) (33.7) (35.5) (35.1) (36.6) (37.6) (38.5) Domestic 7239 8479 9974 9917 11393 13071 14972 (20.5) (21.3) (22.4) (22.2) (22.8) (23.2) (23.6) {63.3} {63.3} {63.2} {63.2} {62.2} {61.7} {61.4} External 4204 4911 5804 5780 6936 8109 9415 11.9 12.4 13.0 12.9 13.9 14.4 14.8 {36.7} {36.7} {36.8} {36.8} {37.8} {38.3} {38.6} Source: Finance Division; Figure in ( ) indicates percent of GDP and { } indicates percent of total debt stock
  • 15. External Debt Currency Mix & Redemption Profile USD 50% Euro 15% JPY 21% Pound Sterling 3% RMB 9% Others 2% 1,419 1,527 2,103 2,383 2,457 2,553 0 500 1000 1500 2000 2500 3000 FY21 FY22 FY23 FY24 FY25 FY26 Million USD Currency Mix  Around 50 percent of the total external debt is denominated in US dollars.  Other significant currencies include the Japanese yen and the euro. Redemption Profile At the end of FY22, the government paid back USD 1.5 billion which is expected to rise to USD 2.1 billion in FY23 and projected to be USD 2.6 billion by the end of FY26.

Editor's Notes

  1. improving physical infrastructure, increasing industrial production, ensuring food security, creating jobs, strengthening healthcare, developing human resources, alleviating poverty etc. through equitable distribution of resources, expanding social safety net programs and adapting to climate change