Rejaul Karim Byron

Though higher default loans and declining foreign currency reserves have been identified as the biggest risks to the economy of Bangladesh in recent times, Finance Minister AHM Mustafa Kamal yesterday fell short of coming up with any definitive measure to address the twin issues save offering some words of hope. 

The proposed budget for 2023-24 is unrealistic and unattainable as the challenges that caused the economic growth to decelerate, foreign exchange reserves to dip and inflation to surge in the past one year still persist, said economists and think-tanks.  

The government’s foreign debt servicing burden may rise by as much as 45 percent in the next fiscal year due to the devaluation of taka and higher utilisation of foreign loans in recent years.

Says economist Zahid Hussain 

In June last year when Finance Minister AHM Mustafa Kamal placed the budget in parliament, inflation had already been creeping up and the foreign currency reserves were on the decline. These two had derailed the full economic recovery from a two-year crisis wrought by the Covid pandemic.

The health ministry continues to struggle with utilisation of funds allocated in the national budget, like it did in the past few years.

The allocation for subsidies in agriculture, food, and power will be raised considerably in the next budget, with an aim to ease inflationary pressure on people.

Sustaining the development that has taken place in Bangladesh in the past 14 years and curbing inequality are key major challenges facing the economy owing to the fallout of the coronavirus pandemic and the Russia-Ukraine war, said Planning Minister MA Mannan.

The government is going to unveil a Tk 7,61,785 crore budget for the next fiscal year on Thursday, setting containment of high inflation as a major target.

The government’s target for borrowing from the banking system in the next fiscal year is set to surpass the Tk 1 lakh crore mark for the second consecutive year amid the twin difficulties of raging inflation and shrinking foreign reserves.

Even though poor people are struggling to make ends meet amid runaway inflation, the government allocation for social safety net programmes may not increase much in the next fiscal year.

Bangladesh loses around $3.3 billion a year due to unreliable power supply to homes, offices, and factories.

The private investment-to-GDP ratio in Bangladesh declined in the current fiscal year owing to a lower confidence among investors amid the persisting dollar crisis and global uncertainty, higher inflation and a fall in demand for goods in international markets.

Bangladesh will get $4.9 billion in loan from the World Bank for a dozen projects in the next fiscal year, given that those are ready on time for implementation as stipulated by the global lender.

Bangladesh’s gross domestic product is estimated to have grown at a slower pace in the current financial year with the biggest blow stemming from the industrial sector, official figures showed.

The government is in a dilemma over the timing of increasing the salary of its employees as a risk of further rise in inflation is associated with it.

Prime Minister Sheikh Hasina has directed the National Board of Revenue not to increase the ordinary people’s tax burden as it looks to improve its revenue collection by 16 percent in the upcoming fiscal year.

Prime Minister Sheikh Hasina has called for a conservative budget for the next fiscal year, discounting the impact of the forthcoming national elections on the pre-budget exercise.

The more than seven years average project implementation period for Bangladesh between 2016 and 2021 presents a risk to the effective implementation of the next country partnership framework, said the World Bank in a report recently.

The International Monetary Fund staff mission yesterday expressed reservations about the likelihood of Bangladesh meeting the minimum reserve requirements for the second tranche of the $4.7 billion loan.