Photo: Messenger
Finance Minister Abul Hassan Mahmood Ali will present the proposed budget for the next financial year (2024-25) in the National Parliament today, keeping the slogan of “Commitment to building a happy, prosperous, developed and smart Bangladesh”. However, at this time of economic tension, the proposed budget may stoke more fears than expectations.
This is the 16th budget of the current Awami League government formed for the fourth consecutive term and the 21st budget of the government led by Prime Minister Sheikh Hasina. Besides, this is the first budget of the current finance minister.
It is reported that Ali will present the proposed budget at 3pm. A 329-page budget speech has been prepared for the finance minister to present the budget. He will present his budget summary in front of the parliamentarians through slides.
According to sources at the Ministry of Finance, the size of the budget for the financial year 2024-25 is going to be Tk 7 lakh 96 thousand 900 crore, which is 4.61 per cent more than the current financial year. In the new financial year, the government wants to increase the expenditure by about Tk 36 thousand crore compared to the previous financial year (2023-24). The size of the budget for the financial year 2023-24 was Tk 7 lakh 61 thousand 785 crore. The government could not increase the size of the budget while mainly focusing on controlling inflation.
In the meantime, the finance minister has said the main goal of the next budget will be to keep the prices of daily commodities affordable. The size of the budget is being limited to Tk 8 lakh crore in order to control inflation and maintain high gross domestic product (GDP) growth rate. Still, domestic and foreign loans have to be taken to meet budget deficits of about Tk 2 lakh 56 thousand crore.
According to the Bangladesh Bureau of Statistics data, inflation has been above 9 per cent for the past 14 months. Especially, an upward trend in food inflation has been observed. The government is repeatedly hoping to bring down inflation. But it has not been able to control inflation in any way. Amidst this challenge, the Finance Division has set a target to bring down inflation to 6.50 per cent in the new financial year.
In this regard, Ghulam Rahman, president of the Consumer Association of Bangladesh (CAB), told The Daily Messenger, “We have heard so far that the government is prioritising inflation control in the upcoming budget. However, in the light of past experience, it can be said that there are fears about how effective it can be. This is because those who have increased the prices of goods through syndicates are part of the government.”
According to sources in the Finance Division, the total revenue target for the new financial year has been set at Tk 5 lakh 41 thousand crore. In the current financial year 2023-24, it was Tk 5 lakh crore. Revenue growth has been estimated at 8 per cent. As always, the National Board of Revenue (NBR) will be responsible for generating the majority of this revenue. In the financial year 2024-25, the NBR has been given a revenue target of Tk 4 lakh 80 thousand crore. Another Tk 15 thousand crore will come from non-NBR sources and the target of receiving revenue outside tax is Tk 46 thousand crore.
The GDP growth in the next fiscal year is estimated at 6.75 per cent, which was 7.5 per cent in the current fiscal year. Later, it was reduced to 6.5 per cent. However, the World Bank has predicted GDP growth of a whopping 5.6 per cent in the current fiscal year. The International Monetary Fund (IMF) has projected around the same growth.
About 64 per cent of the 2024-25 budget can be earmarked for operating expenses. Operating expenses are estimated at Tk 5 lakh 6 thousand 971 crore. Never before has allocation been kept at such a high rate for operating expenses. Out of operating expenses, recurrent expenses are Tk 4 lakh 68 thousand 983 crore. Interest payments for domestic and foreign loans are Tk 1 lakh 13 thousand 500 crore. This time, capital expenditure is estimated at Tk 37 thousand 989 crore.
In the budget for the next financial year, development expenditure is estimated at Tk 2 lakh 81 thousand 450 crore. Out of this, the scheme will cost Tk 5,943 crore. Expenditure on non-ADP special projects is estimated at Tk 7,627 crore. The annual development programme (ADP) expenditure is estimated at Tk 2 lakh 65 thousand crore. Besides, Tk 2,884 crore will be spent on food programmes (non-ADP) and transfers in exchange for work.
Meanwhile, this year, there will be a deficit in the budget of Tk 2 lakh 56 thousand crore, which is 4.6 per cent of the GDP. A few sectors have been selected as sources to meet this huge deficit. Major among them is the banking sector. A target of Tk 1 lakh 37 thousand 500 crore loan is being fixed for this sector. Apart from this, it is expected that assistance of Tk 1 lakh 27 thousand 200 crore will be received from abroad to meet the budget deficit. This includes project loans of Tk 1 lakh crore. Apart from this, Tk 15 thousand 400 crore will be taken from savings bonds considered as the non-bank sector.
In this regard, Fahmida Khatun, executive director of Centre for Policy Dialogue (CPD), told The Daily Messenger that the government is going to face a huge revenue deficit at the end of the current fiscal year 2023-24 and at the end of the financial year, the deficit amount may be Tk 82 thousand crore. “The main challenge for the next financial year’s budget will be restoring macroeconomic stability. How to face those challenges and recover the economy is a big issue. If we observe the trend of the past years, it can be seen that the revenue deficit will continue as before.”
It should be noted that the government has to borrow more than before to finance the budget. As a result, the debt repayment pressure is increasing. In addition, the dollar crisis and the high value of the dollar have put more pressure on the government to repay the debt.
Messenger/Disha
