Budget deficit likely to go up by 20%

The projected national budget deficit in the 2017-18 fiscal year is likely to widen by Tk22,330 crore – around 20.93% of the deficit in the revised budget of 2016-17 fiscal year. The current budget deficit is Tk106,680 crore, and it is estimated to increase to Tk129,010 crore in the new budget, according to the budget outline of 2017-18 fiscal year, a copy of which has been obtained by the Dhaka Tribune. Because of the deficit hike, the government is expected to borrow more money from the banking sector and bring in more financial assistance from foreign countries, said a Finance Division official. The new budget deficit is also expected to be 5.8% of the country’s GDP, which crosses the 5% limit suggested by the country’s development partners. In the 2016-17 fiscal year, the revised budget deficit is 5.4% of the GDP. “The government has raised the foreign assistance target despite reduction of foreign assistance in the revised budget. They aim to bring in Tk54,230 crore, but we doubt they would succeed in their plan,” the official said, requesting not to be named. In the revised 2016-17 budget, the amount of foreign assistance stands at Tk28,770 crore, reduced from Tk36,310 crore in the announced budget. The new budget figures were approved at a meeting between budget management committee and fiscal coordination council at the Ministry of Finance on Tuesday. Finance Minister AMA Muhith presided over the meeting. The total amount of the new budget is estimated to be Tk400,270 crore – about 28.2% higher than the current fiscal year’s revised budget of Tk317,180 crore. Most of the increased budget amount will be spent to pay for government salaries in accordance with the new pay scale that became effective in July 2016, as well as big development projects, said officials at the Ministry of Finance. The government has also set a revenue target of Tk271,260 crore for 2017-18, which is around 28.86% higher than the revised budget target of Tk210,500 crore and 11.74% higher than the announced budget outlay of Tk242,750 crore, according to the outline. The budget outline estimates a GDP of Tk22,243 crore for the 2017-18 fiscal year – 13.36% higher than the revised GDP of Tk19,620 crore in 2016-17. The size of the Annual Development Programme fund is likely to be Tk1,53,330 crore in the next fiscal year. The current year’s revised budget outlay is Tk42,630 crore. The government plans to source 59.97% or Tk77,900 crore of the new budget deficit by borrowing from local banks and using savings instruments. The amount of loans is estimated to be Tk48,960 crore. The revised budget of 2016-17 fiscal year set the target at Tk40,000 crore.