Finance Minister AHM Mustafa Kamal is likely to place a Taka 6,78,064 crore budget for the next fiscal year (FY23) at Jatiya Sangsad (JS) 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.
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 percent based on the positive trend of economic recovery from the pandemic while it also eyes to contain inflation at 5.6 percent.
The next possible budget size of Taka 6,78,064 crore is around 15.3 percent of GDP and also would be Taka 74,383 crore higher than the original budget size of the outgoing fiscal year (FY22) which was Taka 6,03,681 crore. The original budget size of the outgoing fiscal year was around 17.5 percent 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 Taka 3 lakh. The minimum level of income tax will remain the same at Taka 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 Taka 3,000 in other areas.
To meet the demand for this huge budget size, the government has set an overall revenue collection target of Taka 4,33,000 crore which would be 9.8 percent of GDP. The overall revenue collection target in the outgoing fiscal year (FY22) was earlier set at Taka 3,89,000 crore which was 11.3 percent of GDP.
In the new budget, the National Board of Revenue (NBR) will be given the task of mobilizing Taka 3,70,000 crore which is 8.4 percent of GDP. The original revenue collection target by the revenue board in the outgoing fiscal year was Taka 3,30,000 crore which was also 9.5 percent of GDP. The revenue collection target by NBR this time will be Taka 40,000 crore or 12 percent higher.
The next budget also sets a target of attaining non-NBR revenue of Taka 18,000 crore and non-tax revenue of Taka 45,000 crore which was Taka 16,000 crore and 43,000 crore respectively in the outgoing fiscal year. Besides, the government is expecting to get Taka 3,271 crore as foreign grant.
Finance Division officials said that the next budget is likely to set a budget deficit target of 5.5 percent of GDP or Taka 2,45,064 crore which is estimated at Taka 30,383 crore higher than the original budget deficit of Taka 2,14,681 crore in the outgoing fiscal year. The budget deficit in the outgoing fiscal year was earlier set at 6.2 percent of GDP.
To meet the deficit financing in the new budget, the government has raised its target of borrowing from the domestic sources with Taka 1,46,335 crore of which Taka 1,06,334 crore will come from the banking sector, Taka 35,000 crore from the savings certificates and the rest of Taka 5,001 crore from other sources.
Besides, the government is also eying to get Taka 95,458 crore from the foreign sources as loans and grants.
Out of the total budget size, the government is likely to earmark Taka 4,11,406 crore as operating cost including Taka 76,412 crore as the salaries and allowances of the public servants, Taka 73,175 crore as the interests of the domestic loans and Taka 7,200 crore as the interests of the foreign loans.
Despite various challenges, the government has earlier set an original Annual Development Programme (ADP) outlay of Taka 2,46,066 crore which was Taka 2,25,324 crore in the outgoing fiscal year.
The GDP size in the next fiscal year has been estimated at Taka 44,49,959 crore as the government is hopeful of attaining a GDP growth rate of 7.5 percent. The GDP growth target in the outgoing fiscal year was earlier fixed at 7.2 percent.
Besides, the government will pursue various fiscal measures to contain inflation at 5.6 percent in the next fiscal year against the target of 5.3 percent in the outgoing fiscal year.
In the fresh budget, the government is likely to earmark Taka 82,745 crore as subsidy against various sectors which is 1.9 percent of GDP. In the revised budget of the outgoing fiscal year, subsidies were estimated at Taka 66,825 crore or 1.7 percent of GDP.