Tk 1 tr to be spent on interest payment in new budget

Zarif Mahmud: The effect of falling value of rupee against the dollar is also falling in the budget. Additional allocation should be kept for payment of additional interest. This pressure has been created since the current financial year. This pressure will increase in the next financial year.
The Ministry of Finance is preparing to present a budget of Tk 7.69 trillion for the coming financial year 2023-24. Out of this amount, more than Tk 1 trillion should be allocated for interest expenses. This interest expense is almost double what it was five years ago.
Depreciation of the rupee against the dollar has had an impact on interest rates, particularly on foreign loans. However, the increase in internal debt of the government is also a reason for this. According to sources from the Ministry of Finance, 19.2 percent of the proposed allocation in the budget is being allocated for loan interest.
Note that due to the effect of Russia-Ukraine war, the price of oil, food, gas and fertilizer increased abnormally in the world market. In addition, the crisis created the US dollar. Due to which the price of dollar increases against money. A rising dollar and commodity prices push up import costs. This increases the cost of power generation, fertilizer and food import. On the other hand, while selling these products at an affordable price, there is a huge pressure on the subsidy.
According to the finance department, in the current (2022-23) financial year, additional subsidy of Tk 21,000 crores should be calculated only for agriculture, electricity and food. Besides, the additional cost of paying the interest of the additional internal debt with the increase in dollar value will be Tk 9,638 crores. In such a situation, economists have urged to increase revenue collection and give importance to budget implementation.
Adviser to the former caretaker government has said that the budget should be formulated with emphasis on six issues in the future. AB Mirza Azizul Islam. He said, firstly, the proportional rate of revenue tax-GDP should be increased.
Secondly. We need to look at what measures can be taken to reduce inflation. Thirdly. Allocation to social security sector should be increased. It should be arranged so that it is distributed fairly.
Fourthly. In order to solve the dollar crisis, steps should be taken to increase the reserves in coordination with Bangladesh Bank.
Fifthly. In terms of exports, new markets and measures to diversify products should be looked at.
Sixth. To increase remittances, new markets need to be created and skilled manpower created. So that they can send more remittances, care should be taken in the budget.
According to the sources of the Ministry of Finance, in the current fiscal year 2022-23, subsidies of Tk 39,745 crore have been allocated to the food, agriculture and electricity sectors. Out of this Tk 6,745 crores in food, Tk 18,000 crores in electricity and Tk 15,000 crores in agriculture. But in the end, the subsidy of these three sectors will cost more than Tk 21,000 thousand crore. Then the total subsidy in these sectors will be Tk 60,745 crores.
Meanwhile, in the current fiscal year, Tk 80,375 crores have been allocated for the payment of interest on loans. Another Tk 9,638 crore will have to be counted in interest expenses this year. According to those concerned, a major part of this expenditure will go towards domestic interest expenditure. However, the pressure on this sector will be less in the next financial year due to the decrease in the sale of savings certificates.
Finance department sources say that due to the increase in all types of loans except savings certificates, interest expenses will increase in all these sectors in the next financial year. Even the interest cost of foreign loans will increase in the next financial year. And even if the sale of new savings certificates is low, the interest expense may exceed Tk 50,000 crore against the previously sold savings certificates.
Analyzing the budget data of the last six financial years, it can be seen that the interest expenditure in the financial year 2018-19 was Tk 49,461 crores. Later this expenditure increased to Tk 57,664 crores in the financial year 2019-20, Tk 70,606 crores in the financial year 2020-21, Tk 71,244 crores in the financial year 2021-22, and Tk 80,375 crores in the financial year 2022-23.