Tk 761,785 crore budget to be placed in JS
Deficit amounts to Tk 261,785cr
The government is going to prepare a big budget for the next fiscal year (2023-24). But the government has backed away from too ambitious budget formulation due to uncertainty over revenue. It was initially thought that an expansionary budget would be formulated for the next fiscal year.
The size in this proposed budget, the total expenditure target is Tk 761,785 crore and the Finance Minister will propose setting the total target of government income at Tk 500,000 crore. This target is equal to 10 per cent of GDP. However, the amount for the current fiscal year is 15 per cent higher than the target. On the other hand, the total deficit in the budget has been set at Tk 261,785 crore, which is equal to 34.36 per cent of the total budget and 5.2 per cent of the gross domestic product (GDP).
But the reality is different, towards the end of the fiscal year it was found that it would not be possible to raise the money required to prepare the big budget. That would not be possible, especially given the reality of an election year. Because this time the tariff increase will be as low as possible. As a result, it will not be possible for the National Board of Revenue (NBR), the organization that collects money for the government, to provide a large budget. Therefore, the size of the budget has been reduced.
To meet the huge budget deficit, the target of borrowing (net) from the banking system is Tk 132,395 crore. In the budget of the current fiscal year (2022-23), the amount was Tk 160,334 crore. As a result, the amount of government borrowing from banks will increase by Tk 260,61 crore in one year or 24 per cent.
Finance Minister AHM Mustafa Kamal will present the proposed budget for the fiscal year 2023-24 in the National Parliament on Thursday. The budget speech for the next fiscal year is titled, "One and a half decades of development: Towards a Smart Bangladesh".
According to sources, the GDP growth in the next budget has been estimated at 7.5 per cent. The same growth target was set for the current fiscal year. But in the revised budget it has been reduced to 6.03 per cent. On the other hand, the inflation target has been set at 6 per cent in the next budget. In the revised budget of the current fiscal year, the inflation target has been increased to 7.5 per cent.
According to sources in the Finance Ministry, the total revenue target for the next fiscal year has been set at Tk 500,000 crore. Out of this, Tk 430,000 crore will come from the National Board of Revenue (NBR). Revenue from non-revenue sector (Non-NBR) will be Tk 20,000 crore and non-tax receipts (NTR) will be Tk 50,000 crore.
The size of the Annual Development Programme (ADP) for the next fiscal year has been fixed at Tk 263,000 crore. Out of this, Tk 169,000 crore (64.26 per cent) will be in local fund and Tk 94,000 crore (35.74 per cent) will come as foreign fund.
The budget has expressed hope that a huge amount of loans will be available from abroad. As a result, foreign net borrowing has been estimated at Tk 127,019 crore in the next budget.
Apart from this, Tk 3,000 crore will come as a grant. The net foreign debt target for the current fiscal year was Tk 95,458 crore.
In 2023-24 fiscal year, the target of borrowing from banks is Tk 132,395 crore. Most of these loans will be short-term loans. In the current fiscal year, the target of borrowing from this sector was Tk 160,334 crore. In the next fiscal year, net borrowing from savings bonds is proposed to be Tk 23,000 crore. In the current fiscal year which was Tk 35,000 crore.
Its sales have slumped this year due to a clampdown on the sale of savings bonds. As a result, the revised budget has set a target of Tk 25,000 crore for taking loans from savings bonds. In the next fiscal year, the target of gross domestic product or GDP has been set at Tk 550,66,82 crore. In the budget of the current fiscal year, it was Tk 44,49,959 crore. It was later reduced in the revised budget.
At the same time, amid the political instability and boundless uncertainty surrounding the national election, the Finance Minister wants to achieve a gross domestic product (GDP) growth rate of 7.5 in the next fiscal year.
On the other hand, the time he is presenting this budget, the disparity between demand and supply in the country has become evident. Under the unlimited pressure of inflation, the common man is suffering. Excluding Sri Lanka and Pakistan, Bangladesh's inflation is now the highest among Asian countries. Whereas the market price of the country is much higher than the price of fuel oil and gas, fertilizer, food grains, edible oil in the international market. When government's market management, increase in government expenditure in non-productive sectors, huge interest payments against domestic and foreign borrowings of the government to meet the deficit budget and internal smuggling and hoarding are creating upward inflation.
Private financial research institute Policy Research Institute (PRI) Executive Director Ahsan H Mansur said that the size of the budget that the government has set or is going to set, is not very big in terms of reality. But regardless of the size of the budget, it will be difficult to achieve the government's revenue targets. Similarly, the major part of the target of deficit financing will be taken from the banking system. But everyone knows the situation of the banks. Many banks in liquidity crisis. In this situation, there will be no option to print money to get loans according to the government's demand. Doing so will create inflation in the market again and further fuel inflation.