Budget for FY2020-21 sized at Tk 5.6 trillion
While most activities have ground to a halt because of coronavirus, preparations for the next fiscal’s budget are on in full swing. Finance minister AHM Mustafa Kamal is scheduled to present this budget in the national parliament on 11 June this year.
The size of the coming budget is estimated to be Tk 5.6 trillion (Tk 5,60,000 crore). However, it may be expanded further at the last moment, according to sources in the finance division of the finance ministry.
The finance division of the ministry basically prepares the budget. While government declared a general holiday since 26 March because of the coronavirus outbreak, the officials of this division involved in preparing the budget have had to continue with their duties. However, the pre-budget discussion held every year to make the process more participatory, will not be held this time due to the pandemic.
Speaking to Prothom Alo, finance minister AHM Mustafa Kamal said the work on the budget was progressing at a fast pace and it would be presented in parliament in June as usual.
The Annual Development Programme (ADP) allocation for the new budget is being fixed at Tk 2.13 trillion (Tk 2,13,000 crore). This is just Tk 10 billion (Tk 1000 crore) more than the current ADP. However, due to the coronavirus outbreak, it is estimated that only 60 to 65 per cent of the ADP will be used in the current financial year.
As there will be no pre-budget discussion, the finance division has sent letters asking for suggestions from government and non-government research organisations, economists, thinkers, former finance secretaries and eminent academics of various universities. They have been asked also to give their opinions regarding short, mid and long term strategies to tackle the economic and social threats created by coronavirus.
According to officials of the finance division, the impact of coronavirus is being taken into consideration in all factors of the coming budget. Funds will not be allocated other than to essential sectors.
The planning ministry has already informed the other ministries that in the new budget, priority will be given to the health and agriculture sectors and that they should prepare their project proposals with these two sectors in mind.
Executive director of the non-government think-tank Policy Research Institute (PRI), Ahsan H Mansur, told Prothom Alo, keeping coronavirus in mind, the budget should be prepared for the next six months, a ‘corona budget’. This six-month budget should focus on people’s lives, livelihood and rehabilitation.
While preparing the new budget, the finance division’s main concern was revenue collection. During the current fiscal, the revenue target of the National Board of Revenue (NBR) as well as outside of NBR, was around Tk 3.78 trillion (Tk 3,77,810 crore). According to the finance division’s projections, by the end of June, the government’s revenue collection will fall short of target by Tk 550 billion (Tk 55,000 crore).
With a shortfall in revenue collection, budget deficit will increase too. This current fiscal the deficit will not remain the usual 5 per cent of the GDP. The current fiscal’s budget deficit has been estimated at Tk 1.45 trillion (Tk 1,45,380 crore).
The finance ministry has drawn up a concept paper, ‘Possible economic impact of coronavirus in Bangladesh and ways to overcome this’, and has submitted this to the prime minister Sheikh Hasina. The paper says that the deficit of the current fiscal has been estimated at 6 per cent of the GDP. That means at the end of the current financial year, the deficit will be Tk 1.75 trillion (Tk. 1,75,000 crore). The concept paper said that the deficit for the forthcoming 2020-21 fiscal budget is being estimated at 5 per cent.
As there will be no pre-budget discussion, the finance division has sent letters asking for suggestions from government and non-government research organisations, economists, thinkers, former finance secretaries and eminent academics of various universities. They have been asked also to give their opinions regarding short, mid and long term strategies to tackle the economic and social threats created by coronavirus.
Executive director of the South Asian Network for Economic Modelling (SANEM), Selim Raihan, told Prothom Alo that the finance ministry has to leave behind conventional thinking. The budget deficit in the coming fiscal could be 8 to 9 per cent of the GDP, he said. He also said that the package that had been declared must be implemented. That is why the coming budget would have to be an exceptional one, he added.
* This report appeared in the print edition of Prothom Alo and has been rewritten in English by Ayesha Kabir.