The government has its back against the wall with an ambitious budget. Almost Tk 51,000 crore are being cut from the budget within 7 months of the 2023-24 fiscal year. Still there is a deficit of Tk 240,000 crore.
Of this, the Annual Development Programme (ADP) component will be reduced by Tk 18,000 crore and the non-ADP component will be reduced by Tk 31,000 crore Economists say that the government is not getting the opportunity to meet the budget deficit by printing money or taking loans from banks.
Amid the Russia-Ukraine war and the global economic recession, the government announced a budget of Tk 761,785 crore for the fiscal year 2023-24. In terms of money which is the biggest ever. Even though the government expressed satisfaction with this, economists did not consider it realistic.
Finally, in the 7th month of the fiscal year, the government has withdrawn from the ambitious target. Along with reducing the budget size to Tk 710,000 crore, the GDP growth target has also been reduced. And the overall target of price inflation is being increased from 6 per cent to 7 per cent and a half per cent as if the market is helpless to control the situation. However, there will be a deficit of Tk 240,000 crore in the budget.
Executive Director of the Policy Research Institute (PRI) Dr Ahsan H Mansur said, "If the government wants to take a large sum of money from the banking sector, then the interest rate may go up to 15 to 18 per cent. What it did last year, printing money, will cause inflation again. As a result, the government is also hindered here. So hopefully, they won do that this time. So what should the government do? Naturally, we must walk the path of cost reduction."
Economist Prof Abu Ahmed said, "The development budget is being cut. But the government should have gone for a full austerity programme. But it does not appear."
Dr Ahsan H Mansur said, by coordinating our policy, all economic activities should be carried out from the limited income. As a country, government, nation and people individually, this is how it should go.
Added to this is the worry of a downward trend in exports and expatriate income. As a result, it is becoming difficult to maintain foreign exchange reserves with borrowed money. Economists say that foreigners should be careful now.
Prof Abu Ahmed said, "This economy will not turn around easily. Because, here is the birth of despair.
Foreigners are not making any investments. Human rights issues are repeatedly exposed."
According to Finance Ministry Sources, In the first quarter of the current fiscal year (July-September), only Tk 83,644 crore have been spent. It is only 10.98 per cent of the total budget. In the first quarter of the previous fiscal year (2022-23), 12.50 per cent of the budget was spent. Accordingly, the implementation rate of the current budget has decreased by 2.52 per cent compared to the last budget. Besides, the expenditure rate of the budget for the fiscal years 2021-22 and 2020-21 was 11 per cent.
The budget includes allocation of funds for public-private projects (PPP), bank recapitalization. So no need to spend more money in this sector. At the same time, as a result of the austerity policy adopted by the government, about Tk 20,000 crore will be saved by the end of the year.
According to sources, the size of ADP has been fixed at Tk 263,000 crore in the current budget. This target is now being reduced to Tk 245,000 crore.
In the revised budget, the inflation rate has been increased to 0.5 per cent and the Finance Ministry has estimated it at 6.5 per cent. But economic analysts believe that it will not be possible to maintain it at the end of the year.
Finance Ministry officials say it will remain above seven per cent. The gross domestic product (GDP) growth target was set at 7.5 per cent in the budget for the fiscal year 2023-2024. Now this GDP growth is proposed to be reduced by about one percent to 6.75 per cent. Not only has GDP growth been reduced, but the size of the main budget has also been proposed to be cut.
On the other hand, the budget for the fiscal year 2024-2025 starting from next June has been initially estimated at Tk 805,000 crore, which is 13.38 per cent more than the fixed budget of the current fiscal year.
It may be noted that the National Board of Revenue (NBR) has faced a huge shortfall in revenue collection in the first six months (July-December) of the current fiscal year. In the first 6 months of the fiscal year 2023-2024, there is a revenue deficit of Tk 23,227.19 crore compared to the target. At the same time, foreign aid is also decreasing. Due to these reasons, the implementation of the budget is also decreasing.
Out of this, the deficit is Tk 6,782 crore in the month of December. However, the revenue at the end of six months has increased by 13.89 per cent compared to the last fiscal year. Although almost 88 per cent of the target was achieved, the government agency could not avoid a major deficit.
Earlier, the PRI predicted that the budget deficit for the current fiscal year will be more than Tk 50,000 crore soon after the budget was announced. The reason for this was that it would be difficult to achieve the revenue target set in the budget for the fiscal year 2023-24.
Research director of the organization Dr MA Razzaque said that it is not possible to implement the proposed budget. The deficit in this budget is very high. Cuts have to be made to implement the budget. According to him, there are three major challenges in this years budget. The challenges are threefold-first, fiscal policy; It is not possible to implement the revenue collection target that the government has taken. Second, monetary policy. Third, foreign exchange reserves. Budget implementation will not be possible by facing these three challenges.