There may be a surge in public spending by 10.04 per cent in the next fiscal year as the government is allocating more funds for first and second incentive packages for recovering from damages inflicted on the economy by deadly coronavirus pandemic, according to the officials involved with the formulation of the budget.
The next budget outlay may cross Tk 6,25,000 crore which is Tk 5,68,000 crore in this fiscal year.
The government will take various initiatives in the next budget to revive the economy from the damages due to the Covid-19 pandemic. The preliminary idea of setting budget targets has already been formulated. The budget formulation process will start in the first half of the next month. Two meetings on zoom platform on the management of next fiscal year budget and fiscal coordination council will be held on December 31, sources in the finance ministry said.
In these meetings budget spending performance during this fiscal year and possible expenses in the next fiscal year will be discussed. The prospect of world and national economy during the coronavirus pandemic and the likely impact on the macro economy of the country in the 2020-21 fiscal year will be discussed at the meetings. Besides, different indexes will be determined for the 2020-21 and 2021-22 fiscal years.
According to Finance Division sources, the idea is to increase the size of the budget for the next financial year in order to allocate more funds for the healthcare of the citizens. Tk 6,25,000 crore was earmarked as expenses due to various obstacles created by the coronavirus in the end. Top priorities in the next budget include speedy implementation of 100 economic zones to boost investment and employment, giving utmost importance to the health sector in tackling diseases including coronavirus, keeping inflation within 5 percent to keep commodity prices at a tolerable level for the poor section of the community.
Besides, the budget allocation will be increased to complete ten mega projects including Padma Bridge. Considering the business and trade situation during coronavirus, a relaxed Tax-VAT policy will be adopted in the next budget as well. The second perspective plan for the implementation of Vision-41 in continuation of Vision-21 will start from the next financial year. Implementing the dream of a developed country will be started soon.
In the current fiscal year 2020-21, budget implementation process for Tk 5,80,000 crore is in progress amid deadly pandemic situation. There are some challenges in implementing 100% budget due to the pandemic. Even then, the government is trying to fully implement the budget. Budget formulation usually starts six months in advance. Work to this end has been started to set a target on which maximum emphasis will be given in the next budget. A series of recent meetings of the Finance Department on the implementation of the incentive packages to address pandemic has also been considered in the preliminary discussions on key sectors for the forthcoming budget. Relevant sources said that the finance ministry will soon formally start to formulate budget and hold meetings with stakeholders.
Prime Minister Sheikh Hasina on Wednesday asked the Finance Ministry and other related ministries and divisions to formulate another financial stimulus package keeping second wave of COVID-19 in consideration.
The Prime Minister gave the order at a meeting held at her official residence Ganobhaban to finalize the 8th Fifth Year Plan (2021-2025). Additional Secretary of the Ministry of Finance Azizul Alam said that work will be started to formulate a new budget with the aim of tackling the spread of deadly coronavirus pandemic and speeding up the economy. The new budget will focus on employment, increased investment, implementation of ten mega projects and tackling coronavirus pandemic.
He said that the foreign loans and grants would be sought in large quantities for the implementation of the budget in addition to our own financing.
Support needed to implement the forthcoming budget has already been discussed with the World Bank Group and the IMF. Bangladesh is also getting huge support from the two organizations in this fiscal year, he also said.
According to the Economic Relations Division, release of foreign funds increased by 26% to $2,049.19 million from July to November compared to $1,623.35 million at the same time a year ago.
Parties concerned said that the next budget should be formulated in terms of reality. In particular, the targets of key indicators, including Gross Domestic Product (GDP) growth, inflation, and monetary policy, need to be realistic.
In addition, the next budget will have to pay more attention to two issues i.e. where will the money come from and where will it go. Priorities need to be redefined in the budget. There is a need to consider the current needs and what may be needed in the near future, the insiders also said.
The grim picture of the ailing health sector of the country has been exposed during the coronavirus pandemic situation. Therefore, the next budget should give the highest priority to the health sector and more stimulus packages should be provided for the health and food security of the country.
Besides, social security, education, and employment should also be given priority. On the other hand, budget financing should not be carried out in the conventional manner. As the revenue will not be collected up to the mark so, focus should be given on taking more foreign aids. If the budget can be used properly and the financing is also right there is no harm even if the budget deficit is between 7-8 percent, the insiders opined.
As per Planning Commission sources, an Annual Development Program (ADP) of Tk 2,14,611 crore was formulated for the current financial year. Of this, Tk1,34,643 crore has been allocated from the government's own fund and Tk 9,466 crore from the implementing agencies' funds. Besides, Tk 70,502 crores will be managed from foreign sources as assistance.
According to the Implementation Monitoring and Evaluation Division (IMED), Tk 38,472.77 crore was spent on ADP implementation in the first five months of the current financial year which is 17.93% of the allocation.
According to analysts, health risks will not come under control if we do not get out of the conventional trend. If health risks are not controlled, the economy will not be active. Coronavirus infection must be prevented. There is no alternative. That is why the government is thinking of providing free vaccines to all. Healthcare is divided into two parts: public health services and personal health services. Allocations will be kept for the development of both.
It is learnt that a relaxed Tax-VAT Policy will be adopted in the new budget considering the business situation in coronavirus pandemic. Tax burden will not be imposed on the citizens. The government is emphasizing on taking foreign aids and loans to meet the huge budget deficit and to manage the expenditure.
There may be an increase in tax and VAT on products harmful to public health like bidi and cigarette. In addition, a programme will be taken to attract domestic and foreign investment in the health sector in tackling and treating viral diseases like coronavirus pandemic in the forthcoming budget. These investments will be provided with easy loans and long term tax holidays. This time tax exemption will be given on the import and production of food products. The National Board of Revenue (NBR) is reviewing the issue of providing policy assistance in moving away from conventional policies to overcome the Coronavirus pandemic crisis.
Millions of people will come under social security. In the next budget, 10 million (one crore) people of the country will be brought under the social security net to deal with the financial loss of coronavirus. To this end, Tk 1 lakh crore will be allocated in the next budget, which is the highest ever.
In addition, initiatives have been taken to accelerate the activities of the social security sector to bring poverty down to zero. Under this programme, the government will meet the basic needs of the poor such as food, clothing, medical care, housing and education. An unemployed person will get a job according to his qualifications. In the current budget, Tk 76,500 crore has been spent on social security.
Priority will be given to ten sectors to recover the economy by tackling the coronavirus challenge. The health sector has been given special importance to save lives from the deadly coronavirus. In the new budget, priority will be given on investment, production, employment, human resource development, poverty alleviation and food security.
The most allocated sectors on the basis of public and public interest will be: Ministry of Local Government, Ministry of Defense, Department of Secondary and Higher Education, Division of Road Transport, Division of Health, Department of Primary and Mass Education, Division of Power, Division of Public Safety, Ministry of Science and Technology and Ministry of Railways. In this fiscal year, about half of the total budget i.e. Tk 2,65,996 crore is being spent in these ten sectors. The next budget will be formulated with maximum allocations in these sectors.
Meanwhile, Bangladesh will follow the role model of developed countries to accelerate social security activities. It is learnt that 145 programs are being implemented to alleviate poverty and improve living standards through 23 ministries and division of the government. The highest allocation has been made in this fiscal budget in the social security sector which is about Tk 74,000 crore. However, the finance minister said that the allocation would be further increased, adding that the vision is to eradicate extreme poverty from the country by 2021. For this reason, the allocation in the social security sector is being increased in the budget every year. The amount of this allocation will be doubled in the next five years.
ask/wi
