The government has decided to contain the growing budget deficit from the new financial year beginning this July.  

Finance Division officials said that the budget deficit, which was more than 6 per cent of the gross domestic product in FY21 on the back of the Covid outbreak, would be projected at 5.5 per cent for the new financial year.

The budget deficit shot up to 5.5 per cent in FY20 from 4.8 per cent in FY19 while the figure for the current FY22 was projected to be 6.2 per cent.    

Economists, however, called for stopping unnecessary development projects  and increasing revenue to tackle the budget deficit.

Centre for Policy Dialogue distinguished fellow Mustafizur Rahman on Saturday said that the government should spend more on social safety programmes to retain the purchasing power of the people.

Supply chain disruptions during the protracted Covid pandemic and later following the Russian invasion of Ukraine since February 24 have turned the global market volatile.

Like other import-dependent countries, Bangladesh is paying the penalty for the situation, said Mustafizur.

According to the Bangladesh Bureau of Statistics, point-to-point inflation in February 2022 hit 6.17 per cent, 16-month high, as food prices have sharply gone up amid the prevailing high non-food inflation.

Finance Division officials said that it was imperative for the government to check the budget deficit for a better management of debt.

Some 11 per cent of the current budget worth Tk6.03 lakh crore was earmarked for paying the interest on the foreign and domestic borrowing.

The Coordinated Council of Macro-Economy and Budget Management is likely to hold a meeting today to fix the budgetary indicators for the upcoming financial year, said the Finance Division officials.

Finance minister AHM Mustafa Kamal is expected to preside over the meeting virtually.    

Besides announcing the reduction of the budget deficit from 6.1 per cent in the outgoing fiscal year to 5.5 per cent for FY23, the Finance Division is likely to propose the new fiscal year’s overall outlay at Tk 6,79,350 crore or 15.38 per cent of the GDP.

The annual GDP growth, finance ministry officials said, is likely to be projected at 7.5 per cent against the 7.2 per cent for the outgoing fiscal year.

Policy Research Institute executive director Ahsan H Mansur suggested increasing revenue, especially from direct taxes, to maintain a budget deficit which should be below 6 per cent.

He said that the country needed revenue generation at a higher rate to match the country’s aspiration for becoming a developing nation in 2026.

Finance Division officials also said that the country’s overall revenue income was likely to be projected at Tk 4,37,000 crore in the new financial year compared with the Tk 3,39,000 crore for the outgoing financial year.