In the face of acute economic woes, the government is all set to revise the ambitious financial targets outlined in the current budget and make them consistent with the current reality.
The coordination council on fiscal, monetary and exchange rate policy took the decision in a virtual meeting on Thursday, with finance minister AHM Mustafa Kamal in the chair.
According to sources, the council decided to downsize the current budget by Tk 510 billion from existing Tk 7,617 billion to Tk 7,100 billion. At the same time, the allocation for the annual development programme (ADP) will be reduced from Tk 2,630 billion to Tk 2,450 billion.
Bangladesh has long been suffering from high inflation and now it is not even close to the target set in the annual budget for fiscal year 2023-24. The rate of inflation has been at least 9 per cent since July this year.
Moreover, it seems quite impossible to achieve the gross domestic product (GDP) growth target, while the revenue collection indicator has continued to underperform this fiscal year. Inward remittance and export earnings have also been below the expected level.
The council decided to revise down the GDP growth rate from 7.5 per cent to 6.5 per cent and raise the inflation target from 6 per cent to 7.5 per cent. Inflation was 9.42 per cent on average until November.
The meeting agreed that it is impractical to believe that the GDP growth rate and inflation target will be achieved given the current political situation.
A responsible source said the size of the next budget is expected to be Tk 8,050 billion, while the inflation target will be 6.5 per cent and GDP growth target 6.75 per cent
Excluding the grant, the government estimated the budget deficit at Tk 2,617 billion for FY24, while the revised budget will squeeze the figure to Tk 2,400 billion.
Tk 8000b budget in the offing
The meeting also discussed the next national budget and agreed on some key issues. A responsible source said the size of the next budget is expected to be Tk 8,050 billion, while the inflation target will be 6.5 per cent and GDP growth target 6.75 per cent.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said, “I would consider it as practical if the revised budget is fixed at Tk 7,100 billion. But it will be ambitious if the next budget exceeds the threshold of Tk 8,000 billion.”
The noted economist further stated the authorities’ success in controlling inflation is a determiner for the people’s comfortability. He, however, sees no hope in mitigating the ongoing dollar crisis.
Regarding the GDP growth rate, he said a 6 to 7 per cent inflation rate is sufficient in the present reality.