Usual budget with 6pc deficit likely tomorrow

Thanks to the COVID-19 crisis, the government is set to announce the new budget with a deficit of 6 per cent of the GDP for the first time in place of the decades-long tradition of the 5 per cent deficit.

Finance ministry officials calculated that the amount of deficit in the new budget, to be placed in the Jatiya Sangsad on June 11, would be Tk 1.9 lakh crore, much of which would come from bank loans and borrowings from the donors.

There will no other major changes in the usual budget structure, said the officials against the demand by economists for much higher allocations for the health sector, now in disarray amid rising COVID-19 infections and deaths.

The economists have also advised the government to shift the budget focus from the ‘so-called GDP growth’ to fiscal measures that  would save lives and livelihoods as the COVID-19 outbreak has already increased the number of poor living on less-than-two-dollars income daily.

Finance minister AHM Mustafa Kamal who will present his second consecutive budget will face immense challenges to improve revenue generation in the new fiscal year as the COVID-19-induced obstacles to economic activities have led to a revenue shortfall of over Tk 1 lakh crore in the outgoing fiscal year.     

He would also face challenges to feed the jobless people and announce a mechanism to ensure benefits reaching the targeted people without any more controversy.

According to economists, Mustafa Kamal has a limited option to increase revenue due to lack of reform in the revenue administration leaving the TAX-GDP ratio fixed at 9 per cent, lowest in South Asia, over the years.  

According to finance ministry officials, the overall revenue target is likely to be Tk 3.78 lakh crore, of which Tk 3.3 lakh crore will be collected by the National Board of Revenue.

The government is likely to borrow about Tk 85,000 crore from the banking system and Tk 76,000 crore from the donor agencies to meet the record deficit.          

The government has already set the annual development programme of Tk 2,02,721 crore for the new fiscal year with transport sector once again getting the highest allocation of Tk 52,805.69 crore, or 26.5 per cent, of the total allocation.

The allocation of the highest Tk 15,000 crore to the Rooppur Nuclear Power Plant was already criticised as economists said that the government should be judicious in fund allocation to many unnecessary projects amid the virus outbreak.      

The COVID-19 crisis is set to do away with the traditional grandeur in which the budget was placed in parliament until last year.

It has already been decided that the budget would be announced in the presence of a limited number of parliament members to ensure social distancing.

For the first time in the history of Bangladesh, journalists, foreign diplomats and guests will not be allowed entry in the parliament’s budget session.

The traditional post-budget press conference will be arranged virtually on the following day.

The discussion on the fiscal measures will also be a brief one.

The COVID-19 has already affected the budget-making process as the discussions with stakeholders were suspended.

News Courtesy: www.newagebd.net