Adjusting for inflation, revenue, and IMF requirements, a new budget is being drafted.
Meraj Mavis, Dhaka Tribune || Shining BD
Because of the high commodity prices in the previous year, low-income and poorer groups had to deal with harsh realities. The government's main worries when finalizing the FY24 budget are a lack of revenue and adhering to IMF loan requirements because of the extreme inflationary pressure.
When foreign funding and loans are taken into account, the record budget of Tk7,61,785 crore has a record deficit of Tk2,57,885 crore.
At the end of 11 months, the nation's average inflation rate was 8.04%, exceeding the 5.6% target set by the government for FY23. However, only 6.5% inflation is anticipated in the upcoming fiscal year (FY24).
Experts think that, similar to last year, the inflationary target is essentially impossible to achieve.
This represents a Tk1,01,278 crore increase over the current revised budget. A total revenue goal of Tk5,03,900 crore has been set up, including foreign aid, to cover the significant spending. This will require raising Tk67,637 crore more than was originally planned for the revised FY23 budget.
A total of Tk3,900 crores in foreign grants is anticipated. The government is not required to receive any of the foreign grants back. As a result, earnings from this industry have been correlated with income.
However, the government has given the National Board of Revenue (NBR) a new revenue target of Tk4.3 lakh crore in the budget that was unveiled on Thursday, despite think tanks such as the Centre for Policy Dialogue (CPD) and Policy Research Institute (PRI) projecting a deficit of about Tk55,000 crore when compared to the NBR's revenue target of Tk3.7 lakh crore.
In addition, the value of the taka relative to the US dollar has fallen by about 25%, and reserves have fallen by about 30%.
Other organizations, meanwhile, are observing the terms of their loans from the International Monetary Fund (IMF).
Some of them are required to be implemented by the end of this year, according to IMF requirements.
As a result, the amount of tax revenue collected has surpassed the FY23 target by Tk62,000 crores.
According to the IMF, tax revenue should increase by Tk 65,000 crores in FY24, and the budget deficit has been reduced relative to GDP in accordance with IMF requirements.
The government must take out more debt from domestic and foreign sources to cover this deficit budget.
However, to make up for the shortfall in the government's debt caused by a decline in the sale of savings certificates, the foreign loan target is being raised dramatically.
Foreign loans are expected to be taken in FY24 at a rate Tk18,671 crore higher than in FY23. Additionally, additional funds will be required in FY24 to pay interest on domestic and international borrowing due to the high level of debt.
According to sources, Tk 1,02,490 crore worth of foreign loans will be obtained in FY24. The FY23 revised budget's Tk83,819 crore foreign loan goal.
In addition, domestic sources are being used to borrow Tk1,15,395 crore.
However, because the IMF demands a gradual reduction in borrowing through the Savings Certificates, a target of Tk17,000 crore less borrowing than the current aim has been set under the terms of the agreement.
Another internal government borrowing source, bank borrowing, is regarded as a crucial tool in the fight against the deficit.
The amount that the government chose to withdraw from banks was Tk1,32,395 crore, which is Tk26,061 crore more than the initial FY23 goal.
But in FY22, the government borrowed Tk75,533 crore from banks.
7.5% GDP is projected, with significant growth expectations.
However, following Cabinet approval on June 1, Finance Minister AHM Mustafa Kamal will submit this budget to parliament as a proposed budget. Following a protracted debate, the budget is anticipated to be approved on June 25.
On July 1st, the new budget will take effect.