- Possible budget Tk 796k 900 cr
- 4.60 percent more than the current budget
-- Tk5 lakh 31k 900 cr targeted revenue
- Bangladesh's growth will remain at 5.6 percent- WB
Economy is reeling under the crisis. Achievement of revenue collection targets is in doubt. Development activities have not slowed down. Although the supply of dollars has increased slightly, the foreign exchange reserves are not increasing to the desired level.
The economy is under great pressure to pay domestic and foreign debt and interest. To overcome such crises, the budget for the next fiscal year (2024-25) is being prepared by prioritizing 10 sectors.
Finance Minister Abul Hasan Mahmud Ali is going to give his first budget of Tk 796 thousand 900 crore. It is 4.60 percent more than the current budget, increasing by 35 thousand 115 crore. The target of revenue collection has been fixed at Tk5 lakh 31 thousand 900 crore. The overall deficit (excluding grants) in the upcoming budget will be Tk 65,000 crore.
These decisions were taken at a meeting of the Coordination Council on Monetary and Currency Exchange Rates and the Budget Management and Resources Committee on Thursday. Finance Minister presided over those two meetings. Meetings held virtually are strictly confidential.
In these two meetings of the highest policy-making level of the economy sector, import, export situation, product prices, and progress in achieving GDP growth, ADP and current budget implementation rate were discussed. Besides, subsidy situation, interest rate, bank loan situation, capital market, revenue sector, savings certificate, inflation, growth also came up in the discussion.
According to sources, the possible budget size for the next financial year and the current revised budget were discussed in the meeting. A senior official of the finance department involved in this process said that the growth of the budget every year has been estimated as contractionary. As a result, the budget size is not increasing much.
When asked, State Minister for Finance Waseqa Ayesha Khan said the economy is going in a good direction. Dollar supply is increasing. She thinks that revenue collection is the main challenge in the next budget. But controlling inflation is given utmost importance. According to her, cash flow will increase around Eid- this may lead to seasonal inflation. But the focus is more on controlling food inflation.
She also said that inflation in Turkey is now 62 percent. In Bangladesh it is still below 10 percent. Various initiatives are being taken to speed up the expenditure of the budget.
Dr. AB Mirza Azizul Islam, Former caretaker government's finance advisor, said that the budget needs to be contracted in the current situation. However, the extent to which the estimate is being implemented remains to be seen. Currently investing isn’t going well. Credit flows to the private sector are low. In this case, achieving 7 percent GDP growth will be difficult. This economist feels that the new budget should contain measures to reduce inflation.
Collecting large amounts of revenue is a big challenge in the next budget. Although the forecast of the finance department says that the overall economic condition of the country will improve in the next six months. Assuming such a situation, a total income target of Tk 5 lakh 31 thousand 900 crore has been set. It is 9.4 percent of total GDP though the current financial year has a revenue target of Tk 5 lakh crore. As a result, the revenue collection target in the new budget is increasing by about Tk32 thousand crore.
VAT net will be extended in Dhaka and Chittagong to collect large amount of revenue. Contracts have been made with private organizations especially for setting up EFD machines. Besides, new taxpayers will also be identified. The National Board of Revenue (NBR) plans to work in coordination with BRTA, City Corporation, DPDC to bring new tax payers under the net.
Apart from this, e-voice is being made mandatory for payment of Musak of Tk 20 lakh or above. Earlier it was mandatory for Tk 50 lakhs. Besides, through the implementation of Income Tax Act-2023, efficiency of revenue management will be increased, collection will be increased and service quality will be improved.
According to sources, 10 sectors are being prioritized in the upcoming budget. This includes inflation control. 'Food for all', supply chain development, achieving growth, increasing the reach of social security programmers, modernizing every village, ensuring digital health and education, giving priority to fast track infrastructure projects, addressing climate impacts and taking steps to tackle global crises.
It is also said that the inflation should be controlled by keeping the budget deficit at a manageable level. Besides, successful implementation of monetary policy is necessary to control inflation. Apart from this, food should be ensured for all by giving importance to agriculture, farmers, peasants and rural economy.
According to sources, in the coordination council meeting regarding financial currency and currency exchange rate, the growth rate of GDP for the next financial year was set at 6.75 percent. The finance minister brought down the growth rate slightly compared to the current financial year. In the current financial year, the growth rate is estimated at 7.5 percent. However, according to the latest forecast of the World Bank, Bangladesh's growth will remain at 5.6 percent.
In the meeting, inflation control has been considered as the challenge of the economy at the moment. It is said there, if inflation is not reduced, there will be no gain in achieving growth. As a result, considering the overall situation, it was decided to pay more attention to inflation control.
A senior official of the finance department who was present in the meeting said that inflation is estimated at 6.5 percent in the current financial year. But it is not possible to reach that target. Last February, inflation rose to 9.67 percent. As a result, inflation will be targeted at 7.5 percent in the future. The finance department feels that to control inflation, interest rates on bank loans are increasing, imports are being reduced, and unnecessary expenditure is being reduced. Besides, the money supply is being reduced.
Sources also said that subsidy was discussed in that meeting. It is said that the subsidy may decrease slightly in the future due to the decrease in the price of goods and fuel oil. But the pressure to pay subsidy arrears for the past few years will be high. That is why the overall expenditure in the subsidized sector is not decreasing.
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