Next budget may be 13.5pc bigger29 March 2023
Business Report :
The government is likely to place a 13.5-percent bigger budget for the next fiscal year (FY 2023-24), with higher subsidies and debt-servicing costs.
Such a higher outlay would be due to a 35-percent increase in subsidies and incentives, coupled with 27-percent rise in allocation for debt servicing, and 6.0-percent rise in annual development programme (ADP).
Finance Division officials said the FY 24 budget size might stand at Tk 7.698 trillion, against the current outlay of Tk 6.78 trillion, which saw 12-percent rise compared to the previous fiscal.
They also said despite the recent rise in electricity and gas prices, the government's total subsidy in the new budget would see a robust rise. The subsidy allocation for food, agriculture, fertiliser, and open market sale of food items by the Trading Corporation of Bangladesh (TCB) would rise in the new fiscal, when the upcoming national election is scheduled to be held.
The allocation for incentives to promote export-oriented industries and to attract remittance might also rise in FY 24. Thus, the total additional allocation might rise by 35 per cent, they added.
In the current fiscal, the total allocation for subsidy and incentives was Tk 827.45 billion, which in the next FY might reach Tk 1.11 trillion.
According to the officials, the government's allocation for debt servicing in FY 24 might increase by 27 per cent to Tk 1.02 trillion - from the current fiscal's Tk 803 billion.
As the reasons behind debt servicing cost increase, they elaborated deprecation of taka against the US dollar, excessive rise of the London Inter-Bank Offered Rate (LIBOR) rate, increase in the US Treasury interest rate, and interest rate rise of the treasury bonds, among others.
The officials said the government has enforced various austerity measures in the current fiscal. But it might need to make increased allocation in the next fiscal to meet the demands - usually created in the election year.
The finance minister, in a recent pre-budget meeting with media outlet editors, hinted at increased spending to support growth targets.
He said: "How will the economy run unless money is spent?"
Keeping these in mind, the Finance Division officials have planned to raise the ADP size by 6.0 per cent in FY 24, compared to the actual budget of the current fiscal.
Thus, the ADP size in the next budget might stand at Tk 2.60 trillion, which is Tk 2.46 trillion in the current budget.
However, the officials are in a dilemma over resource mobilisation in the next fiscal, as they do not see any chance that the Russia-Ukraine war will end soon.