The Asian Development Bank has agreed to provide up to $1 billion in budget support by June, but the government must commit to several terms that include reducing the tenure and number of private bank directors.
The costs of eight mega projects soared by a staggering 68 percent, or $7.52 billion from the initial estimation, mainly due to poor and faulty feasibility studies, corruption, and delays in launch, according to the report of a government-formed task force.
The International Monetary Fund has set a prior condition for introducing a full 15 percent statutory VAT rate on 213 products before placing the $645 million loan proposal for the fourth tranche to its executive board.
Finance adviser talks about govt’s 3 strategies to ease economic strain
The interim government may consider a dearness allowance for lower-grade government staff to provide respite from the ongoing high inflation.
Subsidies for the power sector are likely to balloon 83 percent this fiscal year as the interim government is planning to clear all arrears owed to private power producers.
As much as $670 million (around Tk 8,200 crore) from slow-moving World Bank-funded projects will be repurposed, with most of the funds going towards budget support as the government looks to navigate the narrow fiscal space amid a slowing economy.
Over half of the government’s total revenue expenditure during the first four months of the current fiscal year of 2024–25 was on interest payments alone, mainly due to increased borrowing and a rise in the interest rates.
With an aim to restore macroeconomic stability, reduce inflation, and contain pressure on foreign currency reserves, Finance Minister Abul Hassan Mahmood Ali is going to place a Tk 7,96,900 crore budget for the 2024-25 fiscal year tomorrow.
The overall revenue generation target will be Tk 537,000 crore in the new fiscal year that begins on July 1, which is 7.4 percent higher than that of the goal of the outgoing financial year.
The subsidies and incentive expenditures in the upcoming budget are going to be more than that of the current fiscal year.
The government has not addressed the stability issue through its fiscal policy for two years in a row although the economy is in turmoil owing to both external and internal pressures. A noted economist, however, thinks it can bring the situation under better control through the budget in the next fiscal year beginning on July 1.
Fighting raging inflation and putting the economy back on track have not been taken seriously as evidenced from the government’s delayed response, which set the scene for one of the worst economic crises in its history and an unprecedented prolonged period of higher consumer prices, said an economist.
The government is not moving at full throttle in bringing discipline to the banking sector, implementing reforms wholeheartedly, taking measures against syndication, and bringing money launderers under the rule of law, said a top economist.
As the government wants to lower expenses, it is likely to contain the budget deficit to 4.6 percent of gross domestic product in the next fiscal year, a level seen a decade ago.
After the IMF’s loan, the World Bank is now going to provide $500 million in budget support to Bangladesh, double from what it had initially planned, by the end of June, said finance ministry officials.
The allocation for interest payments of domestic and foreign loans will likely increase by 38 percent to Tk 129,000 crore in the upcoming budget due to a significant hike in the cost of borrowing from both sources
After more than seven years of discussion, the government is set to finally undertake two projects involving Tk 8,483 crore for the Rohingya and host communities.
