Finance Minister AHM Mustafa Kamal announces the budget for the fiscal year 2020-21 today (Thursday) with utmost importance on human life and livelihood amid Covid-19 pandemic.
This is his second as finance minister and but it is the government’s 50th budget. According to the details of his budget speech, he has placed his plan in the Jatiya Sangsad today to bring the economy back to normalcy after a difficult period. As a result of the pandemic of Covid-19, people all over the world are in danger of losing their jobs and lives. In such a situation, the budget for the fiscal year 2020-21 has been formulated with priority on the livelihood of the people of the country. The next fiscal year growth rate is projected at 8.2 per cent with the estimated average inflation rate for next fiscal year at 5.4 per cent. Next, fiscal year outlay is Tk 5,68,000 crore which is 6.46 per cent bigger that the outgoing fiscal year. Gross Domestic Products has grown by a slower pace of 5.2 per cent in the outgoing fiscal year 2019-20 due to the impact of the virus, shows the data as per the latest documents of the finance division.
In the budget speech, Finance Minister AHM Mustafa Kamal said, “We have a dream of announcing big GDP growth on the occasion of the birth centenary of Father of the Nation Bangabandhu Sheikh Mujibur Rahman. The growth rate target of this fiscal year is 8.2 per cent to 8.3 per cent.
Minister said, “Country has not been affected by coronavirus during the first eight months of this fiscal year. Asian Development Bank predicted Bangladesh growth rate to be 7.8 per cent during the first eight months.”
“As per directive of Prime Minister Sheikh Hasina, we will buck the trend of the economic downturn and build the desired economic foundation in the future in continuation with the previous development,” he said.
Kamal in his budget speech said, “The International Monetary Fund (IMF) has announced that next year our growth will be 9.5 per cent. The darkness that now surrounds us will disappear one day.”
Thanks to the Covid-19 crisis, the government has announced the new budget with a deficit nearly 6 per cent of the GDP for the first time in place of the decades-long tradition of the 5 per cent deficit. According to the budget document, the amount of deficit in the new budget is Tk 1.89,997 crore, much of which comes from bank loans and borrowings from the donors. There are no other major changes to the usual budget structure, against the demand by economists for much higher allocations for the health sector, now in disarray amid rising Covid-19 infections and deaths.
The most talked-about sector, health, is getting an allocation of Tk 29,246crore, an increase of 23.44 percent from the revised budget allocation for the outgoing financial year when there was no international health crisis like Covid-19 pandemic.
Agriculture, a sector upon which government heavily depended on for projecting higher growth despite Covid-19 pandemic and economic downturn, is getting Tk 29,983 crore, including a subsidy of Tk 9,500 crore.
The economists have also advised the government to shift the budget focus from the ‘so-called GDP growth’ to fiscal measures that would save lives and livelihoods as the Covid-19 outbreak has already increased the number of the poor living on less-than-two-dollars income daily. The new budget’s main challenge lies in improving revenue generation in the new fiscal year as the Covid-19-induced obstacles to economic activities have led to a revenue shortfall of over Tk 1,50,000 crore in the outgoing fiscal year. In the budget speech, the finance minister has mentioned 19 incentive packages involving of Tk1,03,117 crore for poor section of society to rich businessmen.
The government is now facing the challenges to feed the jobless people and announce a mechanism to ensure benefits reaching the targeted people without any corruption and controversy.
According to economists, Mustafa Kamal has a limited option to increase revenue due to lack of reform in the revenue administration, leaving the tax-GDP ratio fixed at 9 per cent, lowest in the South Asia over the years. But next fiscal year target is 14 per cent. According to finance ministry officials, the overall revenue target is likely to be Tk 3.78 lakh crore, of which Tk 3.3 lakh crore will be collected by the National Board of Revenue (NBR). The government is likely to borrow about Tk 85,000 crore from the banking sector and Tk 76,008 crore from the donor agencies to meet the record deficit. The government has declared Annual Development Programme (ADP) of Tk 2,02,721 crore for the new fiscal year with transport sector once again getting the highest allocation of Tk 52,805.69 crore, or 26.5 per cent, of the total allocation. The allocation of the highest Tk 15,000 crore to the Rooppur Nuclear Power Plant (RNPP) was already criticized as economists said that the government should be judicious in fund allocation to many unnecessary projects amid the virus outbreak.
The Covid-19 crisis is set to do away with the traditional grandeur in which the budget was placed in parliament until last year. Today's budget will be announced in the presence of a limited number of Members of Parliament (MP) to ensure social distancing. For the first time in the history of Bangladesh, journalists, foreign diplomats, and guests are not allowed enter budget session. The traditional post-budget press conference will be arranged virtually on the following day. The discussion on the fiscal measures will also be a brief one. The Covid-19 has already affected the budget-making process as the discussions with stakeholders were suspended.
ask/wi
