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Budget aims to rein in inflation

Published : Friday, 2 June, 2023 at 12:00 AM  Count : 592

Finance Minister AHM Mustafa Kamal on Thursday presented a budget of Tk 761,785 crore for the fiscal year of 2023-24 in the Jatiya Sangsad (Parliament) aiming at building 'Smart Bangladesh'. The Finance Minister has given top priority to contain inflation stemming from the fallout of the Covid-19 pandemic and economic whammy due to Russia-Ukraine War.

The proposed budget of upcoming fiscal year is 12.34 per cent bigger than the current one. In the current fiscal year of 2022-23, the budget size is Tk 678,064 crore. However, the deficit (including grauts) has been estimated at Tk 257,885 crores.  
"In the light of Prime Minister Sheikh Hasina's sincere love for the country's people, responsibility and unwavering support, Bangladesh will touch the golden line of fulfilling the Father of the Nation's dream of building a "Sonar Bangla" by rising to a completely hunger and poverty-free knowledge-based advanced 'Smart Bangladesh' by 2041, Kamal said in his budget speech.

This is Mustafa Kamal's fifth budget as Finance Minister and the 52nd National Budget of the country.

 It's also the 24th budget of the Awami League government in its five terms in power after the country's independence.

Speaker of Jatiya Sangsad Shirin Sharmin Chowdhury presided over the budget session that started on Wednesday. Prime Minister Sheikh Hasina was present when the Finance Minister presented the budget in the parliament.

Earlier, the Cabinet approved the proposed budget in its meeting held in the Parliament Secretariat with Prime Minister Sheikh Hasina in the chair.

President Mohammed Shahabuddin on Thursday authenticated the proposed national budget for 2023-24 fiscal and the revised budget for outgoing 2022-23 fiscal year for placing before the Jatiya Sangsad.

The new budget is so far the highest. Tajuddin Ahmad presented the country's first budget of Tk786 crore as finance minister of the post-independence Bangabandhu government in 1972.

Before presenting the budget, the Finance Minister told reporters that the upcoming budget will be poor-friendly. There is continuity in the budget to maintain economic development. The network of social safety net schemes is increasing in a big way this time, he said.

The budget focuses on driving the country on an incremental economic-growth matching Bangladesh's LDC-graduation route and fulfilling the conditions of the International Monetary Fund (IMF) for a loan of US 4.7 billion. The proposed budget is 15.2 per cent of the Gross Domestic Product (GDP).

Income The total revenue earnings target is set at estimated Tk 500,000 crore, Of which, the National Board of Revenue (NBR) will collect Tk 430,000 crore from revenue sector and Tk 70,000 crore non-tax revenue will be collected from other sources.

The proposed budget's overall deficit, including grants, will be Tk 257,885 crore, which is 5.2 per cent of the GDP. The deficit rate was 5.5 per cent in the current budget.

Out of the total deficit, Tk 1,55,395 crore is proposed to be financed from domestic sources and Tk 1,02,490 crore from external sources.

According to the budget document, Tk 132,395 crore would be collected from banking sources and Tk 23,000 crore from non-bank loans. Of the amount, Tk 2,828 crore is given for Food for Work (FFW) programme under the Disaster Management and Relief Ministry.

Expenditure Of the total proposed budget, Tk 475,281 crore is allocated for operating expenditures of which recurrent expenditure Tk 436,247 crore, interest Tk 93,531 crore and capital expenditure Tk 390,34 crore.

Tk 277,582 crore, for Annual Development Programmes (ADP) purposes. Out of the original ADP allocation of Tk  2,63,000 crore, Tk  1,69,000 crore will come from the local sources while Tk  94,000 crore will come from the foreign sources.

In the budget, an allocation of Tk 11,674 crore was considered for the autonomous bodies and corporations. The overall ADP size also includes an allocation of Tk 8086.82 crore as allocation in development assistance sector.

Out of the overall ADP allocation of Tk 2,74,674.02 crore, Tk 1,79,895.09 crore will come from the local sources while Tk 94,778.93 crore will come from the foreign sources.

The total number of projects in the new ADP totaled 1,309 including 1,118 investment projects, 22 survey projects, 80 technical assistance projects and 89 projects from the autonomous bodies and corporations.

Considering the highest 10 sector-wise allocation, road transport, highways and bridges topped with a budget of Tk48,781 crore while the power and energy sector received the second highest allocation of around Tk 44,393 crore (16.88pc) followed by education sector with Tk 29,889 crore (11.36pc), housing community facilities with Tk 27,046 crore (10.2pc), health sector with Tk 18,880 crore (7.18pc), local government and rural development with Tk 16,204 crore (6.16pc), agriculture sector with Tk 10,707 crore (4.07pc), environment, climate change and water resources with Tk 8,995 crore (3.42pc), industry and economic services with Tk 5,362 crore (2.04pc) and science and information technology sector with Tk 5,321 crore (2.02pc).

In this proposed budget, total gross domestic production (GDP) is set at Tk 50,06,782 crore, which was Tk 44,39,273 crore in the revised budget of current fiscal.

The inflation target is set to 6.5 per cent though current inflation rate is over 9 per cent.

It has been proposed to provide tax exemption on the import of raw materials for medicines (medicines to cure cancer) manufactured in the country to reduce the cost of treatment for cancer patients. Apart from this, it has been said to continue the existing concessional facilities on the import of raw materials required for the production of medicines, medical supplies and health protection goods.

Subsidy facility is being provided on the import of silicone tube, the main raw material for the production of injectable IV cannulae. Apart from this, concessional facilities are being given on the import of certain raw materials for the production of diabetic management drugs.

The minister proposed allocation of Tk 38,052 crore for the next fiscal year 2023-24 in health and family welfare sector, which was Tk 36,863 crore in the current fiscal year of 2022-23.

The Finance Minister said, "Universal Pension Scheme is being launched from the fiscal year of 2023-24. Bangladeshi citizens can enjoy lifelong pension benefits subject to contribution up to 10 years. Bangladeshis working outside the country can also participate in this facility."

Last year, Kamal's budget attempted to 'restore continuity of development following the impact of the pandemic'. But the Russia-Ukraine war and its impact on the world market, fuel prices, the subsequent dollar crisis and accompanying inflation undercut the government's plans.

The government was forced to adopt more austere outlook and take on a loan from the International Monetary Fund, or IMF, to ease the pressure on foreign exchange reserves in exchange for promises of several reforms to the finance sector.

In the final year of the current government's tenure and this close to the 12th National Parliamentary Elections, Kamal has little opportunity to present concessions in the current budget. Still, he has pushed for the Awami League government's election promises of moving 'towards a Smart Bangladesh after a long development journey'.

With their goal of transforming Bangladesh into a developed, prosperous country by 2041, the development sector has always been given precedence in the budgets the current Awami League government put forth. The shock of the pandemic broke that trend, but now the government seems to be returning to old strategies.

In the current global circumstances, there is a risk of recession in many countries, Finance Minister reminded all in his budget speech.

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