Finance Minister AHM Mustafa Kamal is likely to place a Tk 6.78 trillion budget for the next fiscal year (FY23) at Jatiya Sangsad (JS) on Thursday (tomorrow) with the major challenge of reining inflation amid unfavourable global economic situation.
This will be the country's 51st budget and the 23rd of the Awami League government in five terms. This would also be the 4th national budget in a row to be placed by Kamal.
The finance minister is going to place the budget at a time when the global economy is passing through a volatile situation mainly because of the slow economic recovery from the COVID-19 pandemic along with the ongoing Russia-Ukraine war, reports BSS.
Besides, there is a bit high trend of inflation as the price of essentials and commodities is hurting the commoners to some extent, Taka is constantly devaluating against US dollar, the import of luxurious items are being discouraged to lessen pressure on the foreign currency reserves.
According to the Finance Division officials, the next budget for the FY23 aims to attain a GDP growth rate of 7.5 per cent based on the positive trend of economic recovery from the pandemic while it also eyes to contain inflation at 5.6 per cent.
The next possible budget size of Taka 6.78 trillion is around 15.3 per cent of GDP and also would be Tk 0.74 trillion higher than the original budget size of the outgoing fiscal year (FY22) which was Tk 6.03 trillion. The original budget size of the outgoing fiscal year was around 17.5 per cent of GDP.
To give respite from the heat of high inflation trend, the government is focusing on reining in inflation through increasing subsidies.
The tax-free income ceiling for the individual taxpayers in the next fiscal year is likely to remain at Tk 0.30 million. The minimum level of income tax will remain the same at Tk 5,000 for the taxpayers of Dhaka South and Dhaka North city corporation areas. The tax-free income ceiling for the individual taxpayers will remain at Taka 4,000 in other city corporation areas and at Tk 3,000 in other areas.
To meet the demand for this huge budget size, the government has set an overall revenue collection target of Tk 4.33 trillion which would be 9.8 per cent of GDP. The overall revenue collection target in the outgoing fiscal year (FY22) was earlier set at Tk 3.89 trillion which was 11.3 per cent of GDP.
In the new budget, the National Board of Revenue (NBR) will be given the task of mobilising Tk 3.7 trillion which is 8.4 per cent of GDP. The original revenue collection target by the revenue board in the outgoing fiscal year was Tk 3.3 trillion which was also 9.5 per cent of GDP. The revenue collection target by NBR this time will be Tk 0.40 trillion or 12 per cent higher.
The next budget also sets a target of attaining non-NBR revenue of Tk 0.18 trillion and non-tax revenue of Tk 0.45 trillion which was Tk 0.16 trillion and 0.43 trillion respectively in the outgoing fiscal year. Besides, the government is expecting to get Tk 32.71 billion as foreign grant.
Finance Division officials said that the next budget is likely to set a budget deficit target of 5.5 per cent of GDP or Tk 2.45 trillion which is estimated at Tk 0.30 trillion higher than the original budget deficit of Tk 2.14 trillion in the outgoing fiscal year. The budget deficit in the outgoing fiscal year was earlier set at 6.2 per cent of GDP.
To meet the deficit financing in the new budget, the government has raised its target of borrowing from the domestic sources with Tk 1.46 trillion of which Tk 1.06 trillion will come from the banking sector, Tk 0.35 trillion from the savings certificates and the rest of Tk 50.01 billion from other sources.
Besides, the government is also eying to get Tk 0.95 trillion from the foreign sources as loans and grants.
Out of the total budget size, the government is likely to earmark Tk 4.11 trillion as operating cost including Tk 0.76 trillion as the salaries and allowances of the public servants, Tk 0.73 trillion as the interests of the domestic loans and Tk 72.0 billion as the interests of the foreign loans.
Despite various challenges, the government has earlier set an original Annual Development Programme (ADP) outlay of Tk 2.46 trillion which was Tk 2.25 trillion in the outgoing fiscal year.
The GDP size in the next fiscal year has been estimated at Tk 44.49 trillion as the government is hopeful of attaining a GDP growth rate of 7.5 per cent. The GDP growth target in the outgoing fiscal year was earlier fixed at 7.2 per cent.
Besides, the government will pursue various fiscal measures to contain inflation at 5.6 per cent in the next fiscal year against the target of 5.3 per cent in the outgoing fiscal year.
In the fresh budget, the government is likely to earmark Tk 0.82 trillion as subsidy against various sectors which is 1.9 per cent of GDP. In the revised budget of the outgoing fiscal year, subsidies were estimated at Tk 0.66 trillion or 1.7 per cent of GDP.