Sharp cuts in Bangladesh's non-development spending

Non - development  spending accounts for  the  bulk  of  total  government  spending, averaging  60%  for  the  past  six  years. Utilisation  in  this  category  has  been  much lower  than  in  overall  ADP  spending in  FY15  (through  February).

The  c.46.9% utilisation rate in the first eight m onths of FY15 is lower than the historical average of 53%.  In  FY14,  interest  payments,  wages  and  allowances  accounted  for  the  largest share  of non - development  spending.  A decline  in  crude oil  prices has  helped  lower the  fuel  subsidy  burden  in  FY15,  as  the government  did  not  lower  fuel  prices.

The state - owned  oil  company has  indicated  that  it  will  not  require  subsidy  payments  in FY15. Like ADP spending, non - development expenditure is concen trated in the final
quarter of the fiscal year, particularly June (23% of total spending typically occurs in June).

Based on the historical pattern of back - loaded spending in the last fiscal quarter, Standard Chartered expects  FY15  non - development  spending  to  reach  83%  of the  original  allocation, lower than the 95% average utilisation rate.