High growth election budget coming ahead
Farhad Chowdhury: According to the Finance Department, inflation will not come down much in the coming financial year. As a result, the main challenge is inflation control. And there will be two major pressures on the government’s operating expenses. They are – Subsidy and Interest Expenditure. Besides, there are International Monetary Fund (IMF) conditions for raising revenue. In the face of three challenges, the budget for the fiscal year 2023-24 is being formulated with a high growth rate of 7.5 percent.
Initially, the size of the budget has been estimated at Tk 759,955 crore. The revenue target is Tk 5 lakh crore. As a result, the deficit budget will stand at Tk 259,955 crore.
It will be 5.3 percent of GDP. And the size of ADP has been estimated at Tk 263 thousand crore. As it is the last budget of the current government, many are terming it as an ‘election’ budget.
It was finalized in a virtual meeting of the ‘Fiscal, Monetary and Currency Exchange Rate Coordination Council’ and the ‘Budget Monitoring and Resources Committee’ chaired by Finance Minister AHM Mustafa Kamal on Wednesday. Policy makers of the Ministry of Commerce, Ministry of Planning, Department of Financial Institutions, Bangladesh Bank, National Board of Revenue were present in that meeting.
According to sources, Finance Minister AHM Mustafa Kamal said in the meeting that our position is better than other countries of the world. We have to do better in the future with good indicators.
In the meeting, Planning Minister MA Mannan said that the ADP for the next financial year is correct. He also said that the budget deficit has decreased compared to last year which is good. When contacted at night after the meeting, Planning Minister MA Mannan said that the economy is under pressure but it will get better.
There is nothing to fear about this. He also said that the scope and allowance of social security program has been discussed in the next budget. He also said that the meeting also discussed about bringing inflation under control. Many people are going abroad, expatriate income will increase. This will have a positive impact on the reserves.
Bangladesh Bank Governor Abdur Rauf Talukdar said that the bank’s interest rate will be determined in coordination with the market.
According to sources, inflation is seen as the biggest challenge in the ‘budget monitoring and resources committee meeting’. Because it is assumed that inflation will continue in the next year as well.
The inflation rate for the next financial year is projected at 6 percent. Various measures to control inflation are discussed. Food assistance programs for poor people will be increased to protect against inflation.
Besides, the management sector was highlighted in the meeting. It is said that the most expenditure in this sector in the next financial year will be subsidy and interest expenses. Expenditure in subsidy and interest sector will increase by at least 13 to 14 percent compared to last year.
The subsidy will stand at least close to one lakh crore rupees. And Tk 102,376 crore will be spent on paying interest. The meeting emphasized growth in an election year.
However, the finance department feels that there is still financial pressure. Estimates at the meeting showed that imports are already falling due to the imposition of various restrictions. This will reduce the production in industrial establishments.
And if the production is less, the revenue collection will be less. Still, the growth rate is 7.5 percent. However, the growth target has been reduced to 6.5 percent in the current financial year as well.
However, according to the latest World Bank’s focus, Bangladesh can achieve a growth of 5.2 percent in the fiscal year 2022-23.
In that meeting, social security programs were given more importance in view of the national elections. It was decided to increase all types of allowances and the number of beneficiaries. A new proposal is made to increase the number of beneficiaries by 24 lakh.
As a result, Tk 130 thousand crore are allocated to this sector. Besides, the subsidy in this sector will increase by Tk 1300 crore due to TCB, OMS program. Tk 1 lakh 15 thousand crores of foreign loans will be taken. And 80 percent of domestic credit will be taken from the banking sector. The remaining 20 percent will be taken from savings certificates.
The meeting discussed the IMF’s conditions for raising revenue. However, the National Board of Revenue expects the revenue to increase further in the future. That is why the National Board of Revenue (NBR) will embark on reforms to increase revenue. Installation of EFT machines will be started from June to increase VAT collection. The area of tax collection will be increased.
A senior official of the finance department told that there are challenges in increasing the reserves. Remittances are being subsidized to boost reserves. If these indicators are not correct in the economy in the coming days, then more pressure will be created in the economy.
He also said that this year some adjustment has been made by increasing the price of fuel oil, gas and electricity. Fuel prices will be adjusted every three months in the coming days to reduce subsidy pressure. This will be done by taking the average price of the world market over a period of time.
The government is in a kind of apprehension about the revenue collection due to the global crisis and domestic trade situation. This was discussed in the meeting. Analyzing the overall aspect, the NBR revenue target for the next financial year has been set at Tk 5 lakh crore.
Out of this, NBR tax is Tk 4 lakh 30 thousand crore, Non-NBR tax is Tk 20 thousand crore and the target of collection from NTR is Tk 50 thousand crore.
In that meeting, some prospects of the economy sector were highlighted in the coming days, the size of the new budget is increasing, the food grain production situation of the country will be better. Besides, the income of remittance, export and revenue sector will also increase.
Government expenditure will also increase. As a result, gross domestic product (GDP) growth target of 7.5 percent has been set for the financial year 2023-24 taking into account the overall situation. According to the Finance Department, the said index will act as a regulator to achieve GDP growth.
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