Home ›› 13 May 2022 ›› Front
The government is aiming to secure Tk 1,03,095 crore in foreign aids to tackle the deficit in the upcoming national budget for 2022-23 financial year.
It will be Tk 5,357 crore more than the Tk 97,738 crore target of the outgoing FY2021-22, according to Finance Ministry sources.
Economists say that meeting the budget deficit will be a major challenge since its size will grow along with a bigger budget. However, if the way aid and loans from both local and foreign sources have increased in current fiscal continues, the government will be able to breathe a sigh of relief.
Finance Minister AHM Mustafa Kamal is set to table a Tk 6,77,864 crore budget for FY2022-23 in parliament on June 9. The outgoing fiscal’s budget was Tk 6,03,681 crore.
The ministry projects that there will be a Tk 2,44,913 crore deficit in the next budget, which is also 5.5 per cent of the GDP — calculated in line with the updated base year of 2015-16.
Of that total, the government plans to get 42 per cent from foreign aids, grants and loans and manage the rest 58 per cent — Tk 1,41,818 crore — from local sources.
The domestic source target in terms of money will be Tk 28,365 crore higher than the outgoing fiscal’s.
The aims
The government, with its current term nearing the end, wants to initiate a number of short-term projects and finish all the ongoing projects as soon as possible. To that end, the government is taking measures to secure the funding from both internal and external sources in the next fiscal, according to officials working on the budget proposal.
Officials at the Economic Relations Division (ERD) have already hinted that a larger amount of low-interest loans, higher than the outgoing fiscal’s, will come from the World Bank, Asian Development Bank and the Asian Infrastructure Investment Bank in FY2022-23.
Japan and China will also grant higher amount of loans, they said.
Meanwhile, Centre for Policy Dialogue has suggested that the government should increase taking bank loans and usage of foreign funding to meet the budget deficit.
The government should see how it can secure more foreign grants and take fewer loans from internal sources. If grants are not available, then it should go for foreign loans since their interest rates are very low, according to the reputed think tank.
The government was unable to manage the targeted amount it had planned to secure from foreign aid, grants and loans to meet the budget deficit in the last three fiscal years, and was forced to revise and raise the ceiling for funding from domestic sources — which includes loans from banks and savings certificates.
Looking back
In FY2021-22, Bangladesh had aimed to secure Tk 97,738 crore from external sources and Tk 1,13,453 crore from internal ones to meet the budget deficit.
In the first nine month of the current fiscal, the country received $6.79 billion — $6.61 billion in loans and $180.81 million in grants — from foreign sources, up 55 per cent from last fiscal’s $4.38 billion.
ERD official said they expect to receive more than $9 billion of total foreign assistance at the end of FY2021-22.
In the FY2020-21 budget, the government aimed to secure Tk 76,004 crore from external sources to tackle deficit, but it was brought down to Tk 68,414 crore in the revised budget. That move also took the internal funding target up by Tk 5,069 crore.
In FY2019-20, the government planned to secure Tk 60,580 crore from external sources to tackle the budget deficit. But it only managed to receive Tk 41,610 crore at the end of the fiscal.
Due to that, the government had to take Tk 23,249 crore more than the set target from internal sources.
