Awami League Finance Minister Abul Hasan Mahmud Ali has budgeted 6.8 percent GDP growth target for the current (2024-25) financial year. The interim government now in charge of running the country has planned to reduce the GDP growth target to 5.25 percent.
Monday (December 2) financial adviser. The meeting of the Finance, Currency and Exchange Rate Coordination Council Committee held virtually under the chairmanship of Salehuddin Ahmed decided to lower the growth target. This information is known from sources in the Ministry of Finance.
In the meeting, Planning Advisor Professor Wahiduddin Mahmud, Trade Advisor Sheikh Bashir Uddin, Bangladesh Bank Governor Ahsan H. Mansur, Finance Secretary Md. Khayeruzzaman Majumdar, Chairman of the National Board of Revenue. Abdur Rahman Khan, Commerce Secretary Mohang Salimuddin and other secretaries and top level officials of concerned ministries and departments participated. When asked after the meeting, the finance adviser refused to comment to reporters on the contents of the meeting.
According to the sources of the meeting, the inflation rate for the current financial year is also being revised. The overall inflation target in the budget for the current fiscal year was 6.5 percent. In the meeting led by Salehuddin Ahmed, it was decided that the overall inflation target for the current financial year will be kept below 9 percent. Last October inflation was 10.87 percent.
Budget cuts will be less this time than other times. Officials of the Ministry of Finance present in the meeting said that the government is currently giving importance to controlling inflation and restoring stability in the financial sector. Therefore, even though the current government plans to make major cuts in the budget after taking charge, it cannot be done because of the obligation to pay about 50 thousand crores of outstanding subsidies for gas, electricity and fertilizers.
They also said that in addition to several losses in the recent popular uprising, the government’s expenses have increased due to various natural disasters including floods. Therefore, by revising the current budget, about 30 thousand crore Takas are being reduced. This time, the ousted Awami League government gave a total budget of 7 lakh 97 thousand crore Takas.
Meanwhile, the government will come out of the trend of taking more loans from the banks during the previous government’s tenure. The interim government is focusing on borrowing from the sale of savings bonds. The terms of the USD 4.7 billion loan program with the International Monetary Fund (IMF) specified the level of debt from the sale of savings bonds.
The IMF said the government’s current borrowing from savings bonds should be cut by a quarter by 2026. Since then net sales of savings bonds have turned negative. The government now has to think of a strategy to increase sales.
While discussing the overall economic situation in the meeting, while satisfaction was expressed over the growth in remittance and export earnings, concern was expressed over the lack of revenue at the desired rate. According to the data of the National Board of Revenue (NBR), the revenue collection in the first four months of the current financial year was Tk 1 lakh 1 thousand 344 crore, which is Tk 30 thousand 767 crore less than the target. In order to achieve the target, the meeting urged to increase revenue by stopping duty-tax evasion as well as collecting VAT.
At the same time, the issue of increasing non-duty revenue is also discussed. Apart from this, the government is relieved as the foreign exchange reserves have increased somewhat and the exchange rate has remained stable. The Ministry of Finance expects to receive 4 billion dollars of budget support from IMF, World Bank, ADB and other organizations by next June, although no budget support has been received from donor organizations so far this financial year.
The meeting also discussed the budget for the fiscal year 2025-26. In this regard, the government is thinking of giving a new budget of 830 thousand crore Takas. However, it is expected to be finalized in the Coordinating Council Committee meeting in April. In the new financial year, growth will increase to more than 6 percent. Apart from this, the Ministry of Finance hopes that it will be possible to bring down the price inflation to 6 and a half percent.
Their argument for reducing inflation has already been accompanied by contractionary monetary policy and budget spending. Moreover, the prices of international market products are decreasing. At the same time there is no possibility of inflation due to the effect of exchange rate. In total, if the average price inflation is at 9 percent in the current financial year, it will come down to 8 percent on a point-to-point basis by the end of next June, the Ministry of Finance believes.
