Mahfuz Emran: It is known that the national budget is being prepared with the aim of achieving a growth rate of 7.5 percent for the new financial year 2023-24. However, the World Bank and Asian Development Bank (ADB) have said that Bangladesh’s growth in the next financial year will be 5.2 percent and 5.3 percent respectively. Inflation may be targeted at 6 percent for the new fiscal year.
Usually, the next year’s budget is prepared based on the indicators of the first 9 months of the previous financial year. As a result, the Ministry of Finance is making basic preparations for the preparation of the budget at the end of 9 months of the current financial year. The new budget will be given in the first half of next June.
However, the overall subsidy amount will increase in the new fiscal year budget. The government’s anxiety will increase in terms of revenue collection in making the budget. The dollar rate and foreign exchange reserves will also worry the government. The Ministry of Finance is very worried about this. This information is known from the sources of the Ministry of Finance.
How big will budget be?
According to sources, the size of the budget for the financial year 2023-24 may be more than Tk 7 lakh crore. The size of the budget for the current financial year 2022-23 is Tk 6 lakh 78 thousand crore, which can be revised to Tk 6 lakh 54 thousand crore. Annual Development Program (ADP) for the new financial year may be Tk 2 lakh 65 thousand crore. Budget deficit target may be fixed at Tk 2 lakh 65 thousand crores. Among the revenue expenditure, the interest expenditure will be Tk 1 lakh 10 thousand crores. Inflation may be targeted at 6 percent.
It should be noted that the government’s Fiscal Coordination Council meeting decides macroeconomic policy, basic philosophy of budget, GDP growth, inflation etc. Later the allocation was finalized in that light in the resource committee meeting.
What are the caveats?
According to sources in the Ministry of Finance, the amount of subsidy in the country’s budget will increase in the new financial year. Even if the government wants to, it will not be able to reduce the subsidy much in the next budget. Because the stressed economy needs to move. In that case, the subsidy cannot be reduced in some sectors. As it is an election year, the government should keep a sharp eye on this issue.
Budget officials said that the government should pay attention to a few things for the budget. And they are – the conditions of the International Monetary Fund (IMF) must be fulfilled. Revenue should increase. Inflation should be kept under control. The budget deficit should be contained and investment in the private sector should be increased.
Officials involved in the preparation of the budget of the Ministry of Finance said that the government increased the duty-tax and LC margin to discourage the import of various types of luxury goods including cars, fruits, cosmetics, before the last budget and in the budget in order to maintain the reserve against the dollar crisis. Even then, the crisis did not end. The dollar crisis has complicated the preparation of the budget for the new year.
The price of the dollar has been rising since April last year. At that time, the price per dollar was Tk 86, which now averages over Tk 105. At the same time the price of goods in the international market was high. As a result, buying dollars at a higher price and importing them reduces the reserves. The reserve which was $4008 billion, is now around $3100 billion.
It is known that the International Monetary Fund (IMF) has given conditions to reduce subsidies in various sectors including electricity and energy. But after this, the subsidy amount is about 35 percent more for the next financial year compared to the current financial year. A subsidy of Tk 1 lakh five thousand crores has been proposed in the budget of the next financial year. The amount of subsidy in the budget of the current financial year is Tk 81,490 crores.
In the upcoming budget, besides the subsidy, the amount of interest on the loans taken by the government will also increase. The proposed increase in interest on loans for next year is 27 percent, amounting to over Tk 1 lakh crore. Tk 79 thousand 530 crores have been allocated for interest against the loans taken by the government in the current financial year. The increase in dollar value is one of the reasons behind the increase in interest rates on loans.
Budget officials feel that revenue is not being collected as per the target set by the government every year. There are many pressures on it including increased inflation, dollar-crisis. In addition, the government should increase the allocation for education, health and social security sectors in the new budget. Again, according to the conditions of the IMF, the revenue and financial sector should also be reformed. On the other hand, since the pressure of inflation is high this time, the poor and low-income people should be brought under more protection. The allocation should be increased for that.
While there are no social security programs for the urban poor, there are over 122 social security programs, not all of which are for poor people. For example, the pension money of government employees is also allocated under the social security program.
There is also good news
There are also good aspects for the next financial year. The positives are – expatriate earnings and export earnings are still in a good position. In the first eight months of the current fiscal year, more than $1,401 million in expatriate income came in, which is $580 million more than the same period last year. In the first eight months of the current financial year, the growth in export earnings has been as much as 9 and a half percent.
In this context, Finance Minister A H M Mustafa Kamal said, we are trying. However, whatever the balance, the government’s budget will be people-friendly. There should be no doubt about it. He also said that Sheikh Hasina’s government is a humanitarian government.
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