Expenditure was increasing, and revenue was decreasing. And then the COVID-19 outbreak sent expenditure spiralling even higher. Earnings in the last three months of the present 2019-20 fiscal have been dismal and things don’t seem bright for the approaching 2020-21 financial year either.
The new fiscal will prove to be a challenge for the government. Under these circumstances, finance minister AHM Mustafa Kamal will have to present budget heavily dependent on loans.
There is no alternative to borrowing at the moment. The chairman of the National Board of Revenue (NBR), Abu Hena Rahmatul Munim, has already said that the revised revenue target and the target for the coming fiscal are unrealistic. Revenue collection for the current fiscal could be Tk 2,200 billion (Tk 2,20,000 crore) at the most.
Due to COVID-19, the government is having to provide food assistance to the poor, cash assistance to the ultra poor and interest facilities to businesspersons. While stimulus packages of various sizes, totalling Tk 1,000 billion (Tk 100,000 crore), are being provided through the banking sector, the government will have to bear a significant part of this.
The finance minister is looking towards loans, domestic and foreign, to meet the challenge of the coming budget. Finally, the size of the budget to be placed in parliament by the finance minister on 11 June will be Tk 5,569.78 billion ( Tk 5,56,978 crore). The GDP of the coming fiscal is projected to be 8.2 per cent and average inflation rate 5.4 per cent.
No increase in earnings
The earnings in the main budget of the current fiscal has been estimated at Tk 3,820 billion (Tk 3,82,000 crore). In the coming budget the estimated earnings has been increased to Tk 3,890 billion (Tk 3,89,000 crore). Of this, NBR has been told to collect Tk 3,300 billion (Tk 3,30,000 crore). The remaining amount will be collected from earnings outside of taxes. Tk 190 billion (Tk 19,000 crore) is being projected as revenue outside of NBR collections and, the government expects, Tk 50 billion (Tk 5000 crore) will be procured as grants.
The government must pay attention to cutting down on unnecessary expenditure. The government must also strongly clamp down on capital flight and corruption.
Concerning the possibilities of increased earnings, former NBR chairman Musharraf Hossain Bhuiyan said, “If production activities increase, employment will increase too and so will the government’s earnings.”
Pressure of increased expenditure
The targeted earnings will in no way be achieved, but the government will have to spend. A part of this expenditure is for the Annual Development Programme (ADP). The new ADP is to be of Tk 2,050 billion (Tk 2,05,000 crore). Of this, Tk 1,350 billion (Tk 1,35,000 crore) will come from domestic resources and the rest will come from foreign loans.
Most of the non-development budget will be spent on subsidies, stimulus packages, assistance, pension, salaries and allowances for government employees and payment of local and foreign interest. Allocation for these sectors in the coming fiscal is Tk 2,400 billion (Tk 2,40,000 crore).