DHAKA: Bangladesh Finance Division said that country’s next fiscal budget is likely to face 26.74 percent deficit higher than the current fiscal budget.
If political unrest is extended, it will prevent investment and widen the budget deficit, he added.
The government plans over 75% of that deficit will be met by the bank borrowing and saving instruments as there could be a lack of external funds. Interest payment of the next July-June fiscal year will also increase to Tk35,000 crore from the current fiscal’s Tk31,043 crore.
The estimates said the fiscal deficit might be enlarged by Tk16,404 crore due to the possible extra-budgetary spending. The spending is said to result from lower revenue receipts if the country’s political crisis sees no end.
The deficit this fiscal is Tk61,346 crore and the next year it would be Tk77,750 crore. Last week, the Finance Division officials discussed about the structure of the next budget with the visiting IMF mission.
The global lender has set next budget conditions that include, among others, limiting the budget deficit within 5% of the total GDP.
At a press conference during the visit, the mission head Rodrigo Cubero said the resurgence of the political unrest would cast a negative impact on the country’s long-term investment prospect.
Finance Minister AMA Muhith is also concerned about the country’s investment prospect in the political unrest.
As the BNP-led opposition’s countrywide transport blockade and hartals continue, the Finance Division would evaluate the economic losses during the political instability.
According to the Board of Investment, only one foreign direct investment and 12 local investment proposals were submitted in January this year for approval of the board.
“We are preparing the upcoming fiscal year’s budget with a deficit target of Tk77,000 crore. If the political situation worsens, more funds will be drawn from from the banking sector rather than the revenue board,” said an official of Finance Division.
He said a revenue collection of Tk1,25,000 crore this fiscal against the Tk1,49,720 crore target would be satisfactory for the Finance Division.
The next fiscal’s revenue earnings are estimated at Tk1,76,370 crore. Finance Division will propose Tk2,91,600 crore as next budget at the fiscal coordination council meeting next week.
The sum would be 18.1% of the country’s GDP which is projected to grow at 7% in the upcoming year. The estimated total earning during the 2015-16 is Tk2,13,910 crore.
