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The government is likely to set a 6.0 per cent GDP (gross domestic product) growth target for the fiscal year, 2020-21, finance ministry officials say.

The rate is 2.2 per cent lower than the original growth target of 8.2 per cent for the current fiscal year.

A senior finance ministry official told the FE on Sunday the country’s economic activities have been battered severely by the prolonged shutdown aimed at slowing the spread of COVID-19, an illness caused by new coronavirus.

He said almost all types of commercial activities have remained suspended since late March, the factories remained closed, export earnings fell significantly, import also dropped while inflow of remittances  also suffered a blow as expatriates are facing trouble abroad.

The agricultural production also suffered setbacks during the shutdown since the supply of inputs faced disruption, compounded by shortage of farm workers during both cultivation and harvest period.

He said the gloomy pictures demonstrate a clear indication that this year’s GDP growth will remain very far from the target set in the budget.

The World Bank, in mid-April, forecasted that Bangladesh’s GDP growth will be between 2.0 and 3.0 per cent during the current fiscal year.

The International Monetary Fund, IMF, was more pessimistic, saying it will crash land by 2.0 per cent due to the impact of coronavirus pandemic.

“We also guess the same,” said the finance ministry official involved in budget preparation.

He said it will take several years for both the global and domestic economy to recover from the setback it suffered from the virus.

For this, he said, the GDP growth in the next fiscal year will be comparatively lower than the budget estimates.

Another finance division official said the size of the budget for the next fiscal year is yet to be finalised, but may be set at Tk 5.62 trillion. The budget for the current fiscal year is Tk 5.23 trillion.

He said to cope up with the negative effects of the pandemic, the government has announced various types of stimulus packages of nearly Tk 1.0 trillion taka.

A portion of the fund will come from the banking sector while the budgetary allocation will finance, in part.

Some of the incentive packages will be accommodated in the next budget, which is expected to be announced on June 11, he said.

The official said the development activities also took a hit in the current fiscal year due to the virus-linked lockdown.

This year the rate of annual development programme, or ADP, implementation may be the worst ever, he said adding, the size of ADP for next year may remain almost unchanged from the current size of Tk 2.13 trillion.

The revenue earning was in the negative territory compared to the target even before the pandemic hit the economy and the subsequent lockdown.

Officials feared tax collection was far lower than expected during March-April due to the lockdown and the trend may continue in May and June.

Thus, they said, this fiscal’s revenue earning target of Tk 3.77 trillion may face a big shortfall, at least by Tk 600 billion.

In the new budget, the revenue earning target may also remain unchanged or be slightly increased, said a finance division official who preferred to remain unidentified.

syful-islam@outlook.com