Bangladesh's budget deficit keeps widening with the current fiscal's seven-month shortfall having ballooned to nearly Tk 230 billion, as government spending far outstrips revenue receipt.

The deficit was recorded Tk 83.38 billion during July-December or the first half of this fiscal year beginning July 01, 2023.

The deficit is the gap between how much the government spends and how much it receives in taxes. It tends to balloon at a time when spending becomes higher than receipt.

During the period under review, the total revenue mobilisation was Tk 2.24 trillion, up by more than 13 per cent from its corresponding period a year earlier.

However, the total expenditure was recorded Tk 2.47 trillion during the July-January period of this fiscal year, according to the latest finance-division report, resulting in a sharp rise in the shortfall.

According to the finance report, both development and non-development expenditures had increased during the period under review.

Development expenditure surged by nearly 30 per cent to Tk 558.33 billion while non-development by more than 13 per cent  to Tk 1.92 trillion, according to the government account.

"The government does not collect nearly enough in taxes to fully cover the costs of central government and the gap is expected to grow fast in the coming months of the fiscal year," says Dr Ahsan H. Mansur in his presumption over the remaining time of the fiscal 2023-24.

The economist notes that the trend of Bangladesh's fiscal side is that the deficit remains much lower during the first half and starts to grow steeply from January.

Explaining his view the economist says the first six months of any fiscal year usually remain sluggish -- the ministries and divisions can spend at best 30 per cent.

The government expects its total revenue will increase by nearly 16 per cent to Tk 4.50 trillion (approximately) at the end of this fiscal year, ending June 30, helping in executing its Tk 7.62-trillion budget.

In the meantime, the government borrowing cost is climbing in recent months and stoking new concerns about interest payments -- and larger deficits -- even in the years to come.

As of January last, the interest payments amounted to Tk 605.55 billion, up by nearly 16 per over the same period a year. The interest payment accounts for more than 64 per cent from its yearly estimation.

The central bank of Bangladesh stopped 'devolvement' or printing money early in the fiscal year, leading to rise in the yield on government securities meant for borrowing from banks and other investors.

Spending from the annual development programme (ADP) outlay increased by nearly 31 per cent to taka 524.92 billion during the period.

Net outlay for food procurement, however, was significantly lower during the period. It was just Tk 28.92 billion, down by around 68 per cent from the same period a year earlier. The food costs fell as there were bumper harvests of staples, to save the situation somewhat.

Bangladesh has estimated that the next annual budget would be worth Tk 7.62 trillion and there will be a deficit of Tk 2.58 trillion during entire fiscal year.

Bangladesh mainly borrows from domestic sources -- banking and non-banking sources. It also borrows from external sources to meet deficit.