Home ›› 02 Jun 2020 ›› World Biz
The government depends heavily on contribution of agriculture for projecting the growth rate at 8.2 percent in next fiscal despite its struggle to flatten the curve of coronavirus infection and to soften its impact.
Next budget outlay is expected to cross the Tk 5,50,000cr-plus mark in the fiscal year 2020-21, up by over 6.46 percent from that of the last fiscal.
The budget totaling Tk 5,56,978 crore is due to be placed before the parliament on June 11, according to a finance ministry projection. The next fiscal budget will focus on the recovery of the economy as it is hit hard by the coronavirus.
But the finance division has prepared the budget assuming that worldwide deadly coronavirus pandemic will not impact the country's GDP growth, inflation, and budget deficit in next fiscal year.
The official also said the International Monetary Fund, which is a global agency to oversee world's monetary system's stability, forecasts the growth rate at 8 percent in the next fiscal while it was 2-3 percent in the outgoing fiscal.
Major focus on the budget will shift on how to flatten the curve of coronavirus infections in the country from the funding mega projects, which were the incumbent government’s top most priorities, said the official.
According to Bangladesh Bureau of Statistics, country’s agriculture sector is contributing 19.6 percent to the national GDP and providing employment for 63 percent of the population.
Economist and financial adviser to past caretaker government Dr AB Mirza Azizul Islam said, “It is not normal matter the government’s projection is above 8% growth for next fiscal relying heavily on agriculture’s contribution but other sectors like export, import and transportation are affected heavily by coronavirus fallout.”
“There is unprecedented negative impact of the deadly virus on the global economy and Bangladesh is not out of that international wave.”
He further said it is totally an absurd assumption that there is no impact on country’s growth adding that it is also loan-based budget.
Member of General of Economic Division Dr Shamsul Alam said, if the international lending agency predication is right, next GDP growth rate will be above 8 percent.
He said the assumption on inflation rate is also right because this year harvest is good.
Growth rate
Gross Domestic Products have grown by a slower pace of 5.1 percent 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.
The macroeconomic wing of finance division has pegged the GDP growth for 2020-21 at 8.2 percent as projected by the midterm budgetary framework and the inflation rate in the next fiscal is fixed at 5.4 percent. Total GDP for next fiscal is projected Tk 31,71,500 crore.
A large chunk of incentive package, declared by the government, will be earmarked to fight against deteriorating economy due to coronavirus pandemic but most packages are in loan from banks. Finance division put a block allocation of Tk10,850 crore for facing coronavirus pandemic in a bad situation.
Total expenditure
If the said budget outlay for next fiscal is announced actually, it will be up by Tk 33,788 crore or over 6.46 percent, from outgoing fiscal outlay Tk 5,23,190 crore. The revised outlay stands at Tk 5,01,577 crore.
Of the total expenditure, Tk 3,62,856 crore will be used for payment of salaries, allowances, subsidies, and interest rates. Besides, Tk 2,05,145 crore will be used for Annual Development Programme as per finance division documents.
Earning
Total revenue collection target for the next fiscal has been set at Tk 3,78 ,000 crore. Of which the National Board of Revenue (NBR) will mobilise Tk 3,30,000 crore, non-NBR revenue will be Tk 33,000 crore and nontax revenue Tk15,000 crore.
Deficit and financing
The government’s next fiscal deficit is likely to settle at Tk1,78,978 crore or 20.22% of its revised target of Tk1,48,065 crore. It had seen its fiscal position deteriorate even before the Covid-19 crisis and government started the budgeting process from the month of March. But the crisis only mounted the pressure on funds as government initiated relief work and cash support.
Next fiscal deficit will be 5.64% of total GDP
For next budget deficit financing, Tk 88,000 crore will come from bank loan, Tk 1,13,000 crore from internal resources and Tk77,000 crore will come from foreign sources. The targeted loan from national saving certificates stands at Tk 20,000 crore. Asian Development Bank and World Bank will provide budget support of one billion dollars. ADB has already disbursed budget support of over $700 million to some portion of the next fiscal deficit.
