Finance Minister AHM Mustafa Kamal is likely to place a Tk 6,78,064 crore budget for the next fiscal year (FY23) at the Jatiya Sangsad today (Thursday) amid a new pressure on the economy caused by inflation.
This will be the country's 51st budget and the 23rd of the Awami League government in five terms. This would also be the 4th national budget in a row to be placed by Mustafa Kamal.
Market analysts said it is possible to control the rise in prices of domestically produced goods by keeping a sharp eye on the domestic market to tame inflation.
The government needs to devise market strategies to keep inflation at bay, they said, adding that the poorest people who have suffered most due to inflation will have to be protected with cash and food aid through the budget.
The finance minister is going to place the budget at a time when the global economy is passing through a volatile situation mainly because of the slow economic recovery from the COVID-19 pandemic along with the ongoing Russia-Ukraine war, they added.
“The dollar needs to be kept stable to reduce the cost of imports to control inflation. There is no means to tame surging prices of essential commodities in the international market. As a result, the government is taking steps to increase tariffs on lesser-needed and luxury goods to discourage imports,” an economist said.
State Minister for Planning Dr Shamsul Alam said the government is giving utmost importance to controlling inflation in the next budget.
The scope of social security programmes is being expanded to protect the poor, he said, adding that food aid will increase significantly.
“For the first time, the allocation for social security will exceed 3 percent of gross domestic product (GDP). Besides, there is special allocation for job creation in certain areas. Tariffs are being raised to discourage imports of less important goods. Inflation cannot be controlled by allowing the dollar price to an unreasonable level. The dollar price should be left to the market. The price will be right according to the market demand,” he mentioned.
According to the Finance Division officials, the next budget for the FY23 aims to attain a GDP growth rate of 7.5 percent based on the positive trend of economic recovery from the pandemic while it also eyes to contain inflation at 5.6 percent.
The next possible budget size of Tk 6,78,064 crore is around 15.3 percent of GDP and also would be Tk 74,383 crore higher than the original budget size of the outgoing fiscal year (FY22) which was Tk 6,03,681 crore. The original budget size of the outgoing fiscal year was around 17.5 percent of GDP.
To give respite from the heat of high inflation trend, the government is focusing on reining in inflation by increasing subsidies.
The tax-free income ceiling for the individual taxpayers in the next fiscal year is likely to remain at Tk 3 lakh. The minimum level of income tax will remain the same at Tk 5,000 for the taxpayers of Dhaka South and Dhaka North city corporation areas. The tax-free income ceiling for the individual taxpayers will remain at Tk 4,000 in other city corporation areas and at Tk 3,000 in other areas.
To meet the demand for this huge budget size, the government has set an overall revenue collection target of Tk 4,33,000 crore which would be 9.8 percent of GDP. The overall revenue collection target in the outgoing fiscal year (FY22) was earlier set at Tk 3,89,000 crore which was 11.3 percent of GDP.
In the new budget, the National Board of Revenue (NBR) will be given the task of mobilizing Tk 3,70,000 crore which is 8.4 percent of GDP. The original revenue collection target by the revenue board in the outgoing fiscal year was Tk 3,30,000 crore which was also 9.5 percent of GDP. The revenue collection target by NBR this time will be Tk 40,000 crore or 12 percent higher.
The next budget also sets a target of attaining non-NBR revenue of Tk 18,000 crore and non-tax revenue of Tk 45,000 crore which was Tk 16,000 crore and 43,000 crore respectively in the outgoing fiscal year. Besides, the government is expecting to get Tk 3,271 crore as foreign grant.
Finance Division officials said that the next budget is likely to set a budget deficit target of 5.5 percent of GDP or Tk 2,45,064 crore which is estimated at Tk 30,383 crore higher than the original budget deficit of Tk 2,14,681 crore in the outgoing fiscal year. The budget deficit in the outgoing fiscal year was earlier set at 6.2 percent of GDP.
To meet the deficit financing in the new budget, the government has raised its target of borrowing from the domestic sources with Tk 1,46,335 crore of which Tk 1,06,334 crore will come from the banking sector, Tk 35,000 crore from the savings certificates and the rest of Tk 5,001 crore from other sources.
Besides, the government is also eying to get Tk 95,458 crore from the foreign sources as loans and grants.
Out of the total budget size, the government is likely to earmark Tk 4,11,406 crore as operating cost including Tk 76,412 crore as the salaries and allowances of the public servants, Tk 73,175 crore as the interests of the domestic loans and Tk 7,200 crore as the interests of the foreign loans.
Despite various challenges, the government has earlier set an original Annual Development Programme (ADP) outlay of Tk 2,46,066 crore which was Tk 2,25,324 crore in the outgoing fiscal year.
The GDP size in the next fiscal year has been estimated at Tk 44,49,959 crore as the government is hopeful of attaining a GDP growth rate of 7.5 percent. The GDP growth target in the outgoing fiscal year was fixed at 7.2 percent.
Besides, the government will pursue various fiscal measures to contain inflation at 5.6 percent in the next fiscal year against the target of 5.3 percent in the outgoing fiscal year.
In the fresh budget, the government is likely to earmark Tk 82,745 crore as subsidy against various sectors which is 1.9 percent of GDP. In the revised budget of the outgoing fiscal year, subsidies were estimated at Tk 66,825 crore or 1.7 percent of GDP.
