Revenue deficit may stand at Tk 820b this fiscal: CPD

The Centre for Policy Dialogue (CPD) feels that the country's macroeconomic stability is under considerable pressure. The pressure of inflation has pitched people's living standards into a  crisis. Given the situation, the main focus of the 2024-25 financial year's budget should be restoring economic stability, according to the think-tank CPD.

CPD says that for the last 10 to 11 years revenue collection has fallen way below the revenue target. This deficit will continue in the 2023-24 fiscal too and may stand at Tk 820 billion (Tk 82,000 crore) this fiscal. They say that while the government's budget deficit has decreased, the government's dependence on commercial banks has increased in order to meet this deficit. Inflation through the year has been over 9 per cent. Indicators in almost all external sectors including exports, remittance and foreign  investment are in an alarming state.

CPD made these observations at a press briefing on a budget proposal for the 2024-25 financial year. The press briefing was organised today, Saturday, at the CPD office in Dhanmondi of the capital. CPD executive director Fahmida Khatun presented the keynote. Also speaking at the event were CPD distinguished fellow Mustafizur Rahman, research director Khandakar Golam Moazzem, researcher Muntasir Kamal, and others.

CPD stated at the press briefing that the economy was presently facing all sorts of challenges including a slow pace in revenue collection and budget implementation, high inflation, liquidity crisis in banks, and a fall in export earnings, remittance and foreign exchange reserves.

Given the circumstances, CPD has advised to determine three main objectives in preparing the next budget. Firstly, restoring macroeconomic stability and protecting the backward population; secondly, taking initiative to increase revenue collection so that dependence on banks is reduced and it is possible to meet essential expenditure from revenue income; and thirdly, carrying out public expenditure efficiently on a priority basis so that there is no wastage of funds.

CPD executive director Fahmida Khatun proposed that the budget for the new financial year be drawn up on the basis of present reality. She said, the main target of the 2024-25 fiscal budget should be to meet the present challenges and restore macroeconomic stability. This will require mid-term reforms.

Speaking at the press briefing, CPD's distinguished fellow Mustafizur Rahman said, one of the main targets of the present government's election manifesto has been to bring down inflation. The government has taken up certain initiatives to this end, but inflation cannot be controlled by imposing fines of Tk 5 million or Tk 10 million, while certain quarters manipulate the market and make Tk 500 million in seven days. The existing laws must be applied strictly and this must be visible.

Replying to a question from the media, Mustafizur Rahman said that the merging of two banks recently has been positive. There were realistic reasons behind the weakening of the banks. There is a question whether there was any need for so many fourth generation banks given the country's economic condition. The lack of good governance in the banks was visible. And the reasons why these banks had become weak must also be taken into cognizance. Simply merging the banks without doing this will not be effective.

CPD's research director Khandakar Golam Moazzem said that the vibrancy that should have been visible in the new government's first 100 days aimed at reviving the economy, was absent. It has been repeated many times where the reforms are required. Now this needs reflection in the budget. He recommended that the members of parliament participate more actively in the budget discussions in parliament.