A move is underway to cut the inordinate delay by disbursing budgetary funds automatically among around 7,000 government entities including all local government offices across the country.
This is one of the biggest parts of the national budget. Under this head, around 15 per cent of the budget is spent on autonomous and local government organisations.
If effective, the reform measure will ensure speedy disbursement of the funds, people familiar with the matter at the Ministry of Finance have told the FE.
Presently it takes around three months to disburse the money.
They also said the reform measure would help expedite the rate of budget implementation.
Currently, the rate of budget implementation is hovering around 80 per cent.
The government is looking to implement the measure with effect from July 01 next.
The sources said there would be an announcement to that end in the national budget speech.
"We've decided in principle to disburse the budgetary funds automatically for the local government offices from the up-coming fiscal year," said a senior official at the MoF on Tuesday.
He said, "We see all the demand notes for fund disbursement are placed towards the end of the fiscal year, especially during May and June. This creates pressure on the government to meet…"
"It even forces the government to borrow from the expensive sources to meet the demand," he went on.
He also said the government, on introduction of the measure, would be able to predict its cash flow.
The government usually sets aside around Tk 600 billion (60,000 crore) in the budget for such organisations for both development and non-development purposes.
They include all government offices including state-owned organisations (SOEs).
All local government offices including union councils, the lowest tier of the local government, are also included.
Currently, the fund disbursement process is lengthy and riddled with hassles. First, the offices concerned need to divide the allocations into four installments-one each for every quarter of the fiscal year.
Then they need to get these approved by the ministries concerned. They usually get the first installment during the period of September-October.
But on implementation of the reform measure, they will get the first installment sharp on July 01, second installment on October 01, third installment on January 01 and last one on April 01.
Local government experts viewed it as a good initiative. They said it would help expedite the fund disbursement.
"Actually, there is a need for reforms as to how to raise the amount of money for the local government offices," said Tofail Ahmed, a local government expert in the country.
The number of the local government offices is large, around 6000, but the allocation for each office is low, he said.
He, however, said the initiative would help reduce the uncertainty over the fund disbursement up to the lowest tier of the government.
