Bangladesh set to unveil $67.5B budget with 6.5% growth projection

By Faisal Mahmud

DHAKA, Bangladesh (AA) - Amidst forecasts of ongoing economic difficulties, the Bangladeshi government is set to present a Tk 7.97 trillion ($67.5 billion) budget, with one-third of the expenditure relying on borrowing to cover the deficit.

Finance Minister Abul Hassan Mahmood Ali will propose the budget for the new fiscal year, beginning July on Thursday.

This marks the first budget of Prime Minister Sheikh Hasina's fourth consecutive term in office.

Hasina's government has, so far, presented 15 budgets, more than any other political government in Bangladesh's history.

The Finance Ministry sources told Anadolu that the budget will be coupled with a focus on fiscal responsibility and restrained spending.

This approach demonstrates a strategic move towards caution as the country navigates the turbulent waters of the global economic landscape.

The proposed budget's 4.6% increase over the current fiscal year's initial budget is notably a modest growth, deviating significantly from the usual 12-13% annual increase.

As the government wants to lower expenses, it is likely to contain the budget deficit to 4.6% of the gross domestic product (GDP) in the coming fiscal year.

The government usually keeps the budget deficit at around 5%.

In the current fiscal which ends at the end of June, the budget deficit is Taka 2.62 trillion ($22.2 billion).

This proposed restraint underscores the government's dedication to fiscal discipline and contractionary measures, said analysts.

Economist Debapriya Bhattacharya told Anadolu that the upcoming budget will prioritize implementing slightly contractionary policies, specifically designed to address the current global and domestic economic situations.

He, however, cautioned that the planned combination of contractionary monetary policy and an elevated budget deficit will be a challenging balancing act.

The proposed budget may decrease the tax collection target for the National Board of Revenue (NBR), which accounts for 87% of government revenue, by Tk 20 billion ($1.8 billion) to Tk 4.1 trillion ($34.7 billion).

Despite this potential reduction, the overall revenue target for the fiscal year 2024-25 is anticipated to rise to Tk 5.40 trillion ($45.7 billion), a 4.5% increase compared to the current fiscal year's higher target of 16%.

Historically, the NBR has faced challenges in achieving the collection goals.

Additionally, the government has adjusted its GDP growth target for the next year to 6.5%, revising down from the initial projection of 7.5%, and now aiming for 6.75%.