The government is having a tough time preparing the next budget due to the three-pronged pressures: appeasing voters ahead of the election, dealing with political unrest and complying with IMF conditions.
The International Monetary Fund has stipulated that the budget deficit be kept within 4.3 percent of the GDP.
But it is unlikely to happen owing to calls for massive spending from different ministries and politicians, an official of the finance ministry said.
An ambitious revenue collection target, however, would offset the expenditure demands and keep the deficit within IMF’s prescribed limit, the official said, asking not to be named.
But, given the political unrest and slow economic growth, a higher revenue growth is unlikely to materialise.
“Balancing the budget figures this time is going to be a hard act. It is troubling us greatly,” the official said.
The total budget outlay for the upcoming fiscal year would be Tk 222,650 crore, meaning a 16 percent increase over the current year’s budget, according to the Finance Division’s draft estimates.
The official said it is a draft estimate and the amount may increase or decrease depending on the revenue growth target agreed by the National Board of Revenue.
Meanwhile, the total expenditure in the current fiscal year’s budget is likely to be revised down to Tk 189,330 crore, a cut by Tk 2,408 crore from the original outlay.
The size of the annual development programme in the next fiscal year may rise by 25.78 percent to Tk 65,870 crore.
A planning ministry official said the initial size of the ADP was set at Tk 64,343 crore, but owing to the extra demand from ministries for rural roads, bridges, culverts and electricity lines, the figure could go up.
The transport sector is poised to get the highest allocation (22.37 percent of the total outlay), followed by power (13.64 percent) and education (12.93 percent).
Meanwhile, the government payroll is likely to rise by around 20 percent next year, the official said.
“A host of government staff have demanded dearness allowance, and with the election in sight the government is considering the demand,” said the official, preferring not to be named.
The total number of government staff is around 12 lakh, and if the demand is met, the expenditure on payroll would stand at around Tk 28,000 crore. The allocation this year was below Tk 23,000 crore.
To encourage farmers, the government may raise subsidy in the agriculture sector by 50 percent to Tk 9,000 crore by diverting from other sectors.
Due to the IMF conditions, a special Bond may be released in the next budget to make up the capital deficit of state banks and pay loans of Bangladesh Petroleum Corporation to these banks.
In the social security sector, the number of beneficiaries is set to go up by about 10 percent, for which a big chunk will be allocated in the budget.
As the government’s income and expenditure are not in agreement, it has to borrow both from foreign and domestic sources every year.
In the next budget, among the non-development expenditures, the highest amount will be spent on interest payment, which is more than Tk 30,000 crore, about 30 percent hike year-on-year.
Source: The Daily Star
