The government is expected to place a Tk. 6.0 trillion national budget for the fiscal year (FY2021-22) in parliament on June 03 next, people familiar with the development said on Wednesday.
They said the new budget would set an economic growth target at 7.0 per cent against the original target of 8.2 per cent in the last fiscal year.
The budget session of the parliament is scheduled to begin on June 02, according to a Jatiya Sangsad (national parliament) source.
The original budget size in the last fiscal year was Tk 5.68 trillion.
The finance division is now preparing the budget against the backdrop of an unusual socio-economic condition, marked by the Covid-19 pandemic. The government had faced identical situation while framing the budget last year.
"We will hopefully place the budget before the parliament on June 03," an official at the finance division told the FE.
The budget would set a higher borrowing target from the external sources to meet the deficit, which will go beyond 5.0 per cent of the GDP, he said. "We have almost finalised the deals on budget supports worthTk1.0 trillion from the external sources."
He said the external funding is much cheaper than the internal finance and the interest rate is just 2.0 per cent.
The domestic borrowing will mainly come from banking source which is now liquid enough to finance the deficit.
In the meantime, economists said that targeting the external sources was in the right direction. They, however, warned that it would be tough to get the external fund released if the government plans to utilise resources from the existing pipeline.
They suggested the government to focus more on increasing investment both in public and private sectors.
Dr Ahsan H. Mansur, executive director at the Policy Research Institute of Bangladesh (PRI) said: "The budget should have basic goal of expediting the overall investment. Otherwise, enough demand will not be generated in the economy."
He said: "Poor demand means poor job creation."
Dr Mansur, however, said the government must contain the coronavirus infection to facilitate investment in the country.
Dr. Zahid Hussain, an independent economist, express his surprise over the government's decision to get higher funding from the external sources.
"If the external funding is in the form of project aid, then we'll have to improve capacity. Otherwise, we'll not get the fund in the right time."
He said that there is a huge project aid in the pipeline. These fund could not be utilised due to lack of project implementation capacity.
The government is now negotiating with the Asian Development Bank(ADB) for a big amount of fund as budget support.
Dr. Hussain, however, said the budget should emphasise on the health sector, social safety net programme, education and agriculture sectors considering the pandemic and its impact on the people and the economy.
Projects that would create employment and the labour-intensive ones should get priority, he added.
jasimharoon@yahoo.com