Recent Budget Announcement
Bangladesh FM has recently unveiled a Taka 163,589 crore (US$22
billion) budget for the financial year 2011-2012 last month aiming a record high 7 per cent growth and to increase spending on key sectors by nearly a third to tackle its acute power shortage, poverty and inflation.
Finance Minister Abul Maal Abdul Muhith announced the budget with a focus on employment generation, proposing a 23 per cent higher outlay for the next financial year, which is up by Taka 31,589 crore over the actual outlay of Taka 132,000 crore of the outgoing fiscal.
Simultaneously the inflation was also expected to ease slightly to 7.5 per cent against a revised target of 8 percent this year as price spiral of food strained government finances by amplifying its already huge subsidy bill.
Inflation soared to a 31-month high of 10.67 percent while foreign currency reserves were drying up against the backdrop of growing import costs and increasing bills for fuel subsidies.
FM Muhith said the targeted growth would be achieved through major spending boosts for energy and infrastructure - areas long seen as drags on the economy which would help attract more foreign direct investment.
But protection of the ultra poor against the backdrop of growing food price appeared to be a major concern of the proposed budget for the 2011-2012 fiscal starting from July 1 this year as nearly 40 per cent of the country's more than 150 million people live on less than $1.25 a day below poverty line.
A significantly higher allocation of Taka 50,642 crore for development expenditure for the third financial year of Prime Minister Shaikh Hasina’s ruling Awami League government that set a vision for upgrading Bangladesh to a middle-income status by 2021, coinciding with its golden jubilee year.
With an expansion of tax net by over 24 per cent to optimally finance the new national budget, he targeted the revenue income to be Taka 118,385 crore, apparently leaving a revenue surplus of Taka 30,534 crore for the next fiscal, starting from July 1, 2011.
The budget proposed allocation of Taka 140 billion ($1.9 billion) in subsidies for fuel, power, food and fertiliser in the coming fiscal while the subsidy bill in the outgoing fiscal blew out to Taka 143 billion from an original estimate of nearly 10.3 billion taka, largely due to higher global oil and commodity prices.
The budget expects the overall spending to increase 23 per cent in the coming fiscal to Taka 1.6 trillion with the government aiming to cap its deficit at 5 per cent of gross domestic product up from a revised 4.4 per cent of GDP in the outgoing 2010-2011.
The government has allocated Tk 510 crore in the proposed budget for 2011-12 fiscal in favour of science and ICT ministry especially for development of the ICT sector.
Of the total amount, Tk 215 crore will be spent under the Annual Development Programme and Tk 295 crore under non-development sector. Finance minister Abul Maal Abdul Muhith made the announcement while placing the budget for the next financial year before Jatiya Sangsad.
The proposed budget kept a special allocation of Tk 100 crore for the ministry under the non-development sector to nurture the ongoing endeavours of digitising various systems.
In the revised budget of the fiscal 2010-2011, the total allocation for the ministry is Tk 427 crore. Of the amount, Tk 118 crore is under ADP and Tk 309 crore for non-development sector.
The proposed budget said the allocation for the ministry has been made to attain overall socio-economic development of the country through Science and ICT related research, development, extension and the successful application of these activities.
The proposed budget is less private sector-friendly. The same comes amid costlier credit, tight money supply, government's huge bank borrowing, uncertainty in gas supply and growing instability in politics.
Economists of the World Bank have expressed an opinion that the proposed Bangladesh budget for 2011-12 fiscal year is highly ambitious one but implementable provided the prerequisites are fulfilled.
They have highlighted that to enable 7 per cent GDP growth, industrialization and uninterrupted electricity supply have to be ensured, which means a smooth rolling out of power of newly created capacity.