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Bangladesh - April 15, 2023

Bangladesh will face more financial pressure next year

Zarif Mahmud: The overall deficit of the Bangladesh government will increase in the current financial year due to the impact of Corona and global recession. To meet this deficit, the flow of credit from domestic and foreign sources should be increased. It will also increase debt. The financial pressure on the government will increase while paying the debt. However, in the short term, the government may be able to get the situation out of debt temporarily. These data have been highlighted in the International Monetary Fund’s report entitled ‘Fiscal Monitor, April 2023’ published on Wednesday night.
According to the report, there has been some transition last year from the financial deficit that the governments of almost all countries of the world, including Bangladesh, fell into during the corona virus. However, the transition has stalled due to the Russia-Ukraine war. Rather, the crisis has deepened in less developed countries. Due to this crisis, the external debt pressure has increased especially in the less developed countries. The countries are in crisis to repay this debt. About 15 percent of low-income countries are already in debt crisis. Another 45 percent of countries are close to this crisis. Another 45 percent of countries are close to this crisis. Rich countries should come forward to support them.
The organization believes that Bangladesh is still risk-free in terms of foreign debt. Able to repay loans regularly. The country’s foreign exchange reserves are also in a good position compared to other countries. However, the cost of imports has increased due to the rise in global commodity prices. But on the contrary, foreign exchange earnings have decreased. It also increases the price of the dollar. In the last one year, the dollar has increased by about 26 percent in the banking sector.
The report also says that the income of the country (Bangladesh) will increase by 1.1 percent from the last fiscal year to the current fiscal year as a percentage of total GDP. But the cost will increase by about 1 percent. The deficit will increase by 2.3 percent. As a result, the debt will increase by 3 percent.
In this context, the statement of those concerned is, “The expenditure is increasing more than the income of the government. As a result, the expenses have to be met by borrowing. This will temporarily bring some relief to the government, but in the long term, this debt will become a thorn in the neck. On the one hand, additional interest has to be paid against the loan. On the other hand, the financial stress of paying off debt can have a more negative impact on the overall balance. However, if the government can properly manage the loan or use it in the production sector, then some benefit can be obtained from this.
According to the report, the debt of the Bangladesh government increased to 39.1 percent of the total GDP in the last financial year. In the current financial year, it will increase to 42.1 percent. Next year it will further increase to 42.4 percent. Among the less developed countries, Myanmar’s debt will increase by 61.3 percent of GDP this year. 47.8 percent of Nepal.
According to the IMF report, “In the last financial year, 8.7 percent of the total GDP of Bangladesh was revenue income. In the current financial year, it may increase by only 1.1 percent to 8.8 percent. It may further increase to 9.3 percent in the coming year. 9.7 percent in FY 2024-25 and may increase to 10.3 percent in FY 2025-26. And in the current year, Myanmar’s revenue can be 13.9 percent of the GDP size, Nepal’s 21.6 percent. Which is much more than Bangladesh.
According to the report, the revenue of Bangladesh government is decreasing but the expenditure is increasing. The global recession has further increased spending on subsidies in various sectors. Last fiscal year, government expenditure was 12.6 percent of GDP. In the current financial year, it may increase to 14 and a half percent of GDP. In the next financial year, it may decrease to 14.4 percent. But due to the increase in the size of GDP, the quantity will increase even if the rate of expenditure decreases. In the following financial years, the rate of expenditure will exceed 15 percent of GDP.
And in the current year, Myanmar’s expenditure will be 18.6 percent of GDP and Nepal’s will be 26.1 percent. In other words, Bangladesh is quite behind compared to Nepal and Myanmar in the expenditure sector.
According to the report, the overall deficit in the financial management of the Bangladesh government was 3.8 percent of the GDP last fiscal year. This year it will increase by 5.6 percent. It will continue to decrease from the next financial year. Then it will come down to 5 percent. And in the current year, the deficit of Myanmar will be 4.8 percent of their total GDP and 4.5 percent of Nepal. Before Corona, the overall deficit from 2012 to 2019 was 3.5 percent. From the current year 2023 to 2028, the deficit will increase to 5.1 percent of GDP.
The report also says, ‘In the current year, the deficit in the global financial balance will increase. Last year the deficit in this sector was 4.7 percent. This year the deficit will increase by 5 percent. The deficit will continue to decrease from next year. Due to Corona, the biggest deficit was 9.6 percent in 2020.

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