State Minister for Planning Shamsul Alam said the government is planning the budget with caution, avoiding excessive increases in spending in light of the current global economic crisis caused by the pandemic and the Russia-Ukraine conflict. Overall public spending is expected to be 15.4% of GDP in the upcoming fiscal year, the lowest level in seven years.
The ongoing economic crisis, according to the state minister, is a worldwide economic problem that will lead to a recession. However, he stated that the government is aware of the problem. “We are aware of it, and we will prepare our budget in light of the challenges…the combined effects of these two great debacles of our time,” Alam said in an interview. “We will design the next budget with caution, avoiding increasing or extending budget expenditures too much, regardless of what is written in the five-year plan. It will be lower than expected in the Eighth Five-Year Plan,” he stated. He explained that the 8th Five Year Plan was created with the assumption that 2023 will be like any other typical year.
The draft budget for the fiscal year 2022-23 has been set at Tk 678,064 crore, while the 8th Five Year Plan anticipated a budget of Tk 7.92 lakh crore for FY23. The projected budget for FY23 is 12% larger than the initial budget for FY22, which is Tk 6,03,681 crore. The current fiscal year’s budget is 17.5 percent of GDP, while the budget for the following fiscal year is predicted to be 15.4 percent of GDP.
Concerning the measures to be implemented in the 2019 budget, he stated that the budget would not be extremely ambitious this time because the government was focusing on measures that would assist in dealing with the current inflationary difficulties. The state minister stated that prudence is required, despite the fact that the country’s economy did well even during the Covid-19 period in comparison to many other nations, and it performed well in terms of macroeconomic management. Until now, he believes, the rise in inflation was not caused by an increase in demand or an increase in expenses in Bangladesh. According to him, the country has seen an increase in inflation as a result of global price increases because it must import numerous critical items.
He stated that the government intends to implement large-scale social safety net programs in response to an increase in the number of persons with no income or who are financially insolvent. According to Alam, the budgetary allocation for social protection measures will be more than 3% of GDP this time. He stated that the government will have special programs to create jobs in rural areas, as well as special monies to create work for the underprivileged.
Existing social protection measures or programs, such as vulnerable group feeding (VGF), will be maintained, he said. He stated that the government will take steps to ensure that markets operate normally and without disturbance.
The state minister stated that the number of government projects would be the lowest this year compared to previous years. “Projects will be reprioritized,” he stated. According to him, the government would prioritize initiatives that will increase production capacity, notably in agriculture, and create jobs. “And we will prioritize those initiatives that would boost exports by facilitating ports and transportation,” the state minister stated, adding, “That will be the aim.”
Projects that can be completed later will be postponed for a few months or maybe a year, he said. The state minister refused to reveal the amount of projects that could be postponed. When asked if the growth in foreign loans was concerning in light of the crisis Sri Lanka was suffering, the minister stated that the debt to GDP ratio of the neighboring island country was quite high, much above the danger line. He mentioned that the country’s foreign loans were still relatively low, saying, “We’re pretty much in the clear. We have no idea why we are being compared to Sri Lanka. Rather, we assisted Sri Lanka by offering a loan of $250 million,” he explained.
Concerning the country’s foreign currency reserve, the state minister stated that the country would overcome the difficulty because exports were strong. “And we will strive to limit the entry of luxury things, and we may impose taxes on certain commodities that we have the potential to produce,” he stated. He noted that the country’s current account deficit is currently less than 1% of GDP, whereas 2.4% is considered a problem, and added, “There, too, we are in the safe zone.”