The deficit figure in the upcoming budget may exceed Tk65,000crore, marking a rise of nearly 21%, Finance Ministry officials have said.
Subsidy and loan interest payments and a massive Annual Development Programme (ADP) would not only widen the revenue and expenditure gap, but might also end up adding to the inflationary pressures, officials said.
According to primary estimates of the Finance Ministry, the Gross Domestic Product (GDP) would be deemed at Tk13,49,500crore, up Tk1,60,700 crore from the current fiscal year’s figure.
International Monetary Fund (IMF) prescribes that budget should not be more than 4.3% of the GDP.But, in the coming fiscal, deficit may stand at 4.92% of the GDP.
For availing the tranches of the IMF’s Extended Credit Facility, the ministry has made a commitment to the global lender about keeping bank borrowing within Tk24,000crore until June 30, 2014.
However, ministry officials expressed fears that the government would not be able to keep the commitment because of higher allocation demands placed by ministries and divisions and the sluggish revenue and business growth during and after the political turmoil.
An official said low receipts from the savings instruments might also prompt the government to borrow more from banks.
The level of inflation in March and April – 7.46% and 7.48% respectively – hovered above the government’s comfort zone of 7%.
With only a couple of months left before the ongoing fiscal ends, there are chances that the government would keep its inflation forecast at 7%.
Finance Minister AMA Muhith recently told the Dhaka Tribune that the deficit figure in the upcoming budget would not cross 4.9% of GDP.
“Our budget deficit has not crossed the 5% mark in the last six years. But international donors have always kept saying it was too high,” he said.
Former adviser to caretaker government Dr AB MirzaAzizul Islam told the Dhaka Tribune that: “[Government] borrowing from the banking system usually affects inflation and commodity price level.”
He also pointed out that currently, the country’s banking sector had about Tk1,00,000crore non-utilised fund.