Kazi Zahidul Hasan :
The nation would see a huge deficit budget in the next fiscal as the government plans to spend more than it receipts from taxes and other forms of revenue, officials sources said.
They said the government is set to place Tk 3.0 lakh crore budget for the fiscal 2015-16, with Tk 2.10 lakh crore revenue earnings target.
The government earlier approved a Tk 97,000 crore development budget for the next fiscal.
“If such a framework reflects in the budget proposals, the nation would see a Tk 90,000 crore deficit budget that is 5.14 per cent of the gross domestic products (GDP),”
a senior Finance Ministry official familiar with budget preparation told The New Nation on Friday requesting not to be named.
He added that the deficit budget will be mostly financed through internal borrowing and foreign assistance.
Commenting on the issue, Dr Mirza AB Azizul Islam, former Finance Adviser of the Caretaker Government said, a high-level deficit budget will increase macro-economic imbalances and expose the economy to shocks. He further said that the government can go deeper into debt burden once the budget deficit is widened. “Such a debt burden will force the government to spend additional money on interest payment every year and drag down the economic growth,” he added.
“The government is going to spend more on developing the country’s rickety infrastructures targeting a higher revenue earning and external borrowing. But, a shortfall in both local and external resource mobilisation may force the government to depend heavily on bank borrowing, which could fuel inflationary pressures and crowd out credit to the private sector,” he noted.
When asked, he said, the budget deficit should be kept within the 5.0 per cent of the GDP if we consider the ground reality of the Bangladesh economy. “A large budget deficit can create challenges in various economic fronts. It could also hurt fiscal discipline of the government,” said Dr Salehuddin Ahmed, former governor of Bangladesh Bank (BB).
He also said that wide budget deficits will keep inflation high and contribute to a widening current account deficit which heighten exchange rate volatility and result in higher domestic interest rates.
“Bangladesh, a country of low per capita income, should be maintained a moderate deficit budget to improve fiscal discipline and economic growth,” he noted.
The nation would see a huge deficit budget in the next fiscal as the government plans to spend more than it receipts from taxes and other forms of revenue, officials sources said.
They said the government is set to place Tk 3.0 lakh crore budget for the fiscal 2015-16, with Tk 2.10 lakh crore revenue earnings target.
The government earlier approved a Tk 97,000 crore development budget for the next fiscal.
“If such a framework reflects in the budget proposals, the nation would see a Tk 90,000 crore deficit budget that is 5.14 per cent of the gross domestic products (GDP),”
a senior Finance Ministry official familiar with budget preparation told The New Nation on Friday requesting not to be named.
He added that the deficit budget will be mostly financed through internal borrowing and foreign assistance.
Commenting on the issue, Dr Mirza AB Azizul Islam, former Finance Adviser of the Caretaker Government said, a high-level deficit budget will increase macro-economic imbalances and expose the economy to shocks. He further said that the government can go deeper into debt burden once the budget deficit is widened. “Such a debt burden will force the government to spend additional money on interest payment every year and drag down the economic growth,” he added.
“The government is going to spend more on developing the country’s rickety infrastructures targeting a higher revenue earning and external borrowing. But, a shortfall in both local and external resource mobilisation may force the government to depend heavily on bank borrowing, which could fuel inflationary pressures and crowd out credit to the private sector,” he noted.
When asked, he said, the budget deficit should be kept within the 5.0 per cent of the GDP if we consider the ground reality of the Bangladesh economy. “A large budget deficit can create challenges in various economic fronts. It could also hurt fiscal discipline of the government,” said Dr Salehuddin Ahmed, former governor of Bangladesh Bank (BB).
He also said that wide budget deficits will keep inflation high and contribute to a widening current account deficit which heighten exchange rate volatility and result in higher domestic interest rates.
“Bangladesh, a country of low per capita income, should be maintained a moderate deficit budget to improve fiscal discipline and economic growth,” he noted.
