Special Correspondent :
The government’s subsidy spending on energy and agriculture sectors is likely to ratchet up by Tk 10,000 crore in the current fiscal amid skyrocketing oil, fertilizer and natural gas prices in global market, a consequence of the impeding of Russia’s and Ukraine’s exports.
Officials said, the subsidy expenditure in these sectors would shoot up to Tk 35,000 crore from Tk 24,000 crore allocated in the current budget.
“The government’s subsidy spending on energy and agro sectors will overshot the budgetary target as it has decided to allocate additional fund in line with demands from the ministries concerned,” a Finance Ministry official told The New Nation yesterday on condition of anonymity.
He said the Ministry of Power, Energy and Mineral Resources (MPEMR) and Agriculture have already sent proposals for additional subsidy seeking hefty amounts.
Earlier, the two ministries sent proposals to the Ministry of Finance requesting it for allocating an additional amount of Tk 61,000 crore as subsidy against the allocation of Tk 24,000 in the current fiscal year’s budget.
Increase in the price of oil, natural gas and fertiliser in the international market has been cited as the reason for the additional demand for subsidy.
Russia’s invasion in Ukraine sent global LNG, oil and fertilizer prices to record high.
“The Finance Ministry has been struggling to accommodate the exorbitant demand for subsidy payment due to resource constraints,” said the official, adding, “There has been a quantum leap in public expenditures to recover Covid-19 induced economic loss, adding pressure on the government finances.”
However, the ministry is reviewing the proposals and it will come up with a revised budget soon. But it would not be possible to allocate such a big amount as subsidy that the ministries sought in their revised demand.
When asked, he said, “Definitely there will be an increase in subsidy payout for energy and agro sectors considering the needs of the ministries. The government may provide an additional amount of Tk 10,000-Tk 12,000 crore as subsidy to the sectors.”
The power division, under the ministry of MPEMR, in its proposal sought Tk 25,000 crore in subsidy to meet the rising energy import costs. The amount allocated for subsidy in this budget is about Tk 9,000 crore.
On the other hand, the energy division, under the same ministry, sought Tk 32,000 crore in subsidy to meet the liquefied natural gas (LNG) import bills, unless the government increases the price.The government set aside Tk 6,000 crore for LNG in this fiscal year.
The Agriculture Ministry sought Tk 28,000 crore in subsidy in wake of rising fertiliser prices in the international market.
The current fiscal’s budget earmarked Tk 9,000 crore as agriculture subsidy.
