The finance ministry has adopted a strict stance on the use of block allocations of the development budget as part of the government's austerity measures.

It came as the finance division yesterday issued its policy for the revised budget for the fiscal year of 2023-24.

The block allocations are the funds that are earmarked to address emergency needs.

In a letter on October 31, the finance division directed the planning commission to suspend a Tk 11,669 crore block allocations from the annual development programme (ADP) for new projects.

However, the policy regarding the revised budget mentions that fund allocation for not only new projects but also ongoing ones cannot be made without the consent of the finance division.

Although the planning ministry has passed several new projects ahead of the upcoming polls, it will not be able to make funds available for them due to the government's fresh austerity measure to rein in spiralling inflation and reduce pressure on the foreign currency reserves.

There was a Tk 10,244 crore block allocation in the current fiscal year's ADP budget for new locally funded projects and another Tk 1,425 crore in development assistance for special purposes.

Ahead of the polls, the ministries and divisions sent a huge number of projects to the Executive Committee of the National Economic Council (Ecnec) for approval. A good number of projects were approved too.

For example, at an Ecnec meeting on October 31, the government approved 37 projects from a list of 50. Of them, 27 were new and the rest revised ones.

The Ecnec meeting on November 9 approved 45 new and revised projects.

A finance ministry official said after the national polls, depending on the fiscal situation, the ministry might go for relaxing the measures.

According to the revised budget directive, the number of projects in the revised ADP has to be limited, with less important projects removed altogether, to accommodate priority projects.

If ministries and divisions concerned fail to submit their development project proposals by January next year, they will not be included in the revised ADP, says the directive.

The official said the Bangladesh Bank, along with the finance ministry, has been preparing an action plan to restore stability in the country's macroeconomy, which includes containing inflation and increasing foreign currency reserves.

Bangladesh's forex reserves stood at $19.52 billion on November 22, down from a record high of $40.7 billion in August 2021.

The action plan will be submitted to the government after the national election, the official said.

"The action plan will be vital for determining expenditure for new and revised projects from the block allocations."

The finance division will also continue to maintain its previous austerity measures, which came into effect at the beginning of this fiscal year, like refraining from buying new vehicles and allowing foreign trips and reducing allocations for electricity and fuel.

The finance division also asked ministries and divisions to submit their revised budget proposals by December 7.

The official said they would start preparing the revised budget for the ongoing fiscal year soon and it would be finalised by the new government after the national election, which is slated for January 7.