The subsidy bill in the current fiscal budget is likely to cross Tk 50,000 crore due to the stimulus packages announced by the government to offset the economic losses being caused by the coronavirus pandemic.
Finance ministry officials said that it would be very difficult to keep the subsidy within the projected Tk 43,000 crore stipulated in the current budget.
The outcome of these budget measures in the last quarter of the current fiscal year will push the budget deficit to over 6 per cent in the backdrop of a huge revenue shortfall, they said.
Finance Division additional secretary Habibur Rahman said that they were not much worried about the higher expenditure but with the low revenue generation.
The National Board of Revenue had a revenue shortfall of Tk 45,000 crore in the first eight months of the fiscal year.
The shortfall might increase further because of the coronavirus fallout, said Habibur Rahman.
The finance ministry officials calculated that the subsidy in the form of interest payment against the loan schemes under the stimulus packages would cost around Tk 3,000 crore.
The government has announced four stimulus packages involving Tk 67,750 crore as part of its efforts to overcome the economic losses due to the coronavirus economic fallout.
The government will provide 4.5 per cent, in the 9 per cent, interest on the loans to be given to big industries and the service sector from a Tk 30,000-crore package as current capital.
It will also bear 5 per cent, in the 9 per cent, interest on the loans to be given to small and medium enterprises from another package of Tk 20,000 crore, also as current capital.
The finance ministry officials added that they also increased the allocation for the sale of food at subsidised rates in cities in addition to similar rural programmes to feed the poor rendered jobless in the informal sector due to the coronavirus shutdown.
Besides, the government has to spend more money on the health sector, said experts.
Economic analyst and former caretaker adviser Mirza Azizul Islam said that a higher spending against the low revenue generation would not allow the government to keep the budget deficit at 5 per cent of the GDP.
Policy Research Institute executive director Ahsan H Mansur said that the government needed to increase the spending no matter how much the budget deficit was.
According to them, the coronavirus pandemic has already hit the economy hard by disrupting the supply chain, shutting down the transports and halting the informal sector activities.
The Economic Intelligence Unit predicted that Bangladesh’s GDP growth would slow down to 3.5 per cent in the current fiscal year due to the coronavirus impact.
The EIU also said that the preventive measures taken to stem the spread of the outbreak were set to exact a heavy economic toll as the coronavirus pandemic was expected to substantially dampen the economic growth.
News Courtesy: www.newagebd.net