Finance Minister AHM Mustafa Kamal on Thursday placed a Tk 568,000 crore (5.68 trillion) budget for 2020-21 fiscal year in the Jatiya Sangsad, targeting an ambitious 8.2 percent GDP growth, with a comprehensive plan that includes four main strategies.
Observing that all calculations about the global economy have been turned upside down due to the heavy blow dealt by the COVID-19 global pandemic, the Finance Minister said that since the beginning of the pandemic, the government has taken various steps to combat its fallout.
The 130-page budget – placed with the slogan 'Economic Transition and Pathway to Progress' – is the second budget of Awami League’s third successive term in power, and the second one for Mustafa Kamal as the finance minister.
The budget outlay has increased by Tk 44,810 crore, or around 7.9 percent, from the outgoing FY. The previous FY’s budget was around Tk 523,190 crore.
While placing the budget, Kamal said, "We have taken a comprehensive plan to overcome the possible negative impacts of pandemic on our economy and people. Under this plan, we have taken measures that were necessary in the immediate term and we are implementing some in medium term. We have also taken up a range of initiatives that will be implemented in longer term to achieve full economic recovery."
About the main four strategies, he said the government will discourage luxury expenditures and prioritise government spending that creates job.
Due to sound macro-fiscal operation by the government during the last 10 years, the debt-to-GDP ratio is still as low as 34 percent, the finance minister said, adding, “This provides the country a cushion against any negative macroeconomic implication while we are increasing public spending to overcome the crisis.”
“Secondly,” he said, “we are creating loan facilities through commercial banks at subsidised interest rate for the affected industries and businesses so that they can revive their economic activities and maintain competitiveness home and abroad.”
The third strategy is to expand the coverage of the government’s social safety net programmes to protect the extreme poor and
low paid workers of informal sector from the sudden loss of their source of earning due to pandemic,” Kamal said.
Finally, he mentioned that the government will increase money supply to the economy while making a delicate balance between increased money supply and possible inflationary pressure.
Kamal placed the proposed national budget attaching the highest priority to recover from negative impacts of ongoing corona pandemic.
Leader of the House and Prime Minister Sheikh Hasina along with a selected number of lawmakers were present at that time.
The proposed budget expects to contain suggestive measures to offset COVID-19 impact on country’s economy as the pandemic’s onslaughts continued to hit hard the global financial system.
Earlier, President Abdul Hamid authenticated the proposed national budget for 2020-21 FY and the revised budget for 2019-20 FY for placing before the parliament.
The revenue collection target for the coming FY is Tk 378,000 crore. Of the amount, the National Board of Revenue (NBR) has been tasked to realise a revenue collection target of Tk 330,000 crore while the non-NBR revenue collection target is Tk 15,000 crore and the non-tax revenue collection target Tk 33,000 crore. Besides, Tk 4,013 crore will come from foreign grants.
Kamal said, “Our GDP grew consistently at an increasing rate in the last decade. We achieved a GDP growth of 8.15 percent in the
2018-19 FY, the highest among the countries in Asia.”
He said strong domestic demand has been the main driver of our growth.
However, due to the fall in exports and lower-than-expected growth in remittances as a result of long and sustained worldwide lockdowns arising from the impact of COVID-19, the GDP growth rate of the current FY has been revised downward at 5.2 percent, he added.
“In view of the post-Covid recovery, the growth rate is projected at 8.2 percent for FY 2020-21 in line with the long-term plans,” he said adding that, “We expect that inflation will be 5.4 percent during the period.”
The overall budget deficit will be Tk 190,000 crore, which is 6 percent of GDP.
It is to be noted that deficit stood at 5 percent in the last fiscal year.
Out of the total deficit, Tk 80,017 crore will be financed from external sources, while Tk 1,09,983 crore from domestic sources of which Tk 84,983 crore will come from the banking system and Tk 25,000 crore from savings certificates and other non-bank sources.
Total allocation for operating and other expenditures is over Tk 3,62,855 crore (3.62 trillion), and allocation for the annual development programme (ADP) is Tk Tk 2,05,145 crore (2.05 trillion).
Minister Kamal said, “We have made a slight deviation this year from the traditional budget for the sake of effectively combating the deadly coronavirus and resolutely overcoming its economic impact.”
“A structural change has been brought in this year’s budget in terms of setting the priorities of the government,” he said adding that, the health sector is given the highest priority, and provisions have been made for this sector in the form of additional allocation, incentives, compensations, etc.”
The allocation proposed for the social infrastructure sector in the next budget is Tk 1,55,536 crore, which is 27.38 percent of total allocation, in which the allocation for human resource sector (education, health and other related sectors) will be Tk 1,40,222 crore.
The proposed allocation for the physical infrastructure sector will be Tk 1,67,011 crore or 29.40 percent, in which Tk 69,553 crore will go to overall agricultural and rural development, Tk 61,435 crore to overall communications, and Tk 26,758 crore to power and energy.
A total of Tk 1,40,265 crore has been proposed for general services, which is 24.69 percent of the total allocation. An amount of Tk 36,610 crore is proposed for public-private partnerships (PPP), financial assistance to different industries, subsidies and equity investments in nationalised corporations, banks, and financial institutions, which is 6.45 percent of the total allocation.
Another amount of Tk 63,801 crore has been earmarked for interest payment, which is 11.23 percent of total allocation, and Tk
4,777 crore for net lending and other expenses, which comprises 0.84 percent of the total allocation.
Tk 22,884 crore has been allocated for improvement of the health sector while different programmes worth Tk 5,500 crore will be implemented under the Health Services Division to combat the COVID-19 pandemic.
The minister also proposed an allocation of Tk 10,000 crore as lumpsum to fulfil coronavirus emergency requirements.
To ensure better social safety net during and after the COVID-19, he proposed Tk 95,574 crore in the social security sector, which is 16.83 percent of total budget and 3.01 percent of GDP in FY2020-21.
Kamal proposed allocating Tk 24,940 crore for the primary education sector, Tk 33,117 crore for the secondary and higher education sector and Tk 8,344 crore for technical and madrasa education.
He also proposed allocating Tk 22,489 crore for the agriculture sector in the next fiscal year.
This is the country’s 49th budget and the 21st of the Awami League (AL) government in five terms while Tajuddin Ahmed presented the first budget as the finance minister of the post-independence Bangabandhu Government in 1972.
The finance minister is scheduled to hold a post-budget press briefing on virtual platforms at 3:00 pm on Friday.
