The national budget for the fiscal year 2024-25 is being prepared with the utmost care as the government, in the first year of its consecutive fourth term, is facing multifaceted challenges.
The challenges to be addressed in this budget are the pressure of global economic instability, domestic and foreign debt interest payments, and reforms suggested by the International Monetary Fund (IMF).
This budget is likely to be presented in Parliament on the first Thursday of June (June 6). The new finance minister, Abul Hasan Mahmood Ali, who earlier served as foreign minister, will table the budget of income and expenditure for the next year in the budget session of the Jatiya Sangsad. He will be assisted by the country's first female state minister for finance, Waseqa Ayesha Khan.
According to sources in the Finance Ministry, the size of the budget for the new financial year may be around Tk7,96,900 crore, which is 4.6% more than the budget for the current fiscal year 2023-24.
The next budget will be very strategic, according to sources. Each year, budget growth is projected to be contractionary. As a result, the budget size has not increased much this time. Rather, the government has set the goal of reducing unnecessary expenditures as opposed to increasing revenue.
The budget preparation committee believes that the next budget's main goal is to reduce inflation. To fulfil this target, the budget will be formulated on the basis of five pillars. These are: increasing bank loan interest rates to control inflation, discouraging or reducing unnecessary imports, reducing unnecessary expenditure, reducing money supply, and cutting down on subsidies in various sectors.
Besides, some sectors are being prioritized in the upcoming budget. These include ensuring digital health and education, giving priority to fast-track infrastructure projects, developing food supply systems for all, achieving growth, tackling climate change and global crises, extending the reach of social security programs and modernizing every village.
Finance Ministry sources said that the proposed budget has set a revenue collection target of Tk5,31,900 crore, which is 9.4% of total GDP. It is also Tk32,000 crore higher than the outgoing budget. The overall deficit (excluding grants) in the upcoming budget could be Tk2,65,000 crore.
Since the economy is under great pressure from domestic and foreign debt and interest payments, it will affect the next budget, officials said. To deal with it, the government has decided to formulate a strategic budget.
Bangladesh wants to maintain its image in the international arena by keeping the glory of never defaulting on foreign debt intact. For this reason, the government's resources committee has recommended increasing the revenue collection target.
Moreover, the government is taking various initiatives to speed up expenditure in the proposed budget.
The estimated inflation for the current financial year is 6.5%. But it was not possible to meet the target. Last February, the inflation rate was 9.67%. Therefore, the next budget may target inflation at 7.5%.
Officials say subsidies may decrease slightly in the future due to the decline in the prices of goods and fuel oil. However, in the new budget, the pressure to pay the subsidy arrears of the past few years will be high, resulting in an increase in overall expenditure in the subsidized sector.
Officials stated at a recent meeting that managing the budget deficit is the key to controlling inflation. Besides, the successful implementation of monetary policy is necessary to control inflation.
Besides, food for all should be ensured by giving importance to agriculture, farmers, and the rural economy.
Moreover, VAT coverage will be expanded in Dhaka and Chittagong to collect a large amount of revenue in the next budget. Contracts have been made with private companies, especially for setting up Electronic Fiscal Devices (EFD).
Besides, to identify new taxpayers, the National Board of Revenue (NBR) plans to work in coordination with the Bangladesh Road Transport Authority (BRTA), city corporations, and electricity suppliers. Apart from this, e-challans are being made mandatory for payment of VAT of Tk20,00,000 or above. Earlier, it was mandatory for Tk50,00,000.
Moreover, the government is planning to improve the efficiency of revenue management, increase collection, and improve service quality through the implementation of the Income Tax Act of 2023.
Questioned on the issue, Finance Minister Mahmood Ali said budget preparation is underway and the stakeholders are being consulted. “The present government is the government of the common people. So, the budget will be people-friendly for sure,” he added.
