Budget FY 23-24: IMF conditions, inflation, polls 3 key issues
Three issues would be dictating the upcoming fiscal year's budget, the last of the Awami League government's present five-year term: the International Monetary Fund's conditions, the persistently high inflation and next year's national election.
The finance ministry has already identified seven priorities for the fiscal 2023-24's budget with the view to maintaining GDP growth and low inflation, according to a draft prepared by the ministry.
The seven priorities include keeping the supply chain strong to attain the maximum possible GDP growth; tackling the imported high inflation, expanding the social safety net programme and distributing food among the poor at a low price or for free; and putting emphasis on subsidy on electricity, gas and agriculture considering fuel and fertiliser price hike in the global market and slump in the exchange rate.
The three other priorities continuation of the subsidy on fertiliser and mechanising agriculture; human resource development and employment generation, and rural development.
The government is also keeping in mind the IMF conditions related to the budget, said finance ministry officials involved with the proceedings.
Besides, the election is not far away.
"The government is preparing the budget keeping all these things in mind," said one of the officials.
With that frame of mind, Finance Minister AHM Mustafa Kamal would be starting his series of pre-budget meetings today.
Today, he would be meeting with the economists.
In the three-day pre-budget discussions, Kamal will also meet with the business community and editors of the print and electronic media, where he will seek their opinion on how the next budget should be considering the myriad of challenges.
Ramping up revenue collection is one of the major conditions for the $4.7 loan billion loan programme from the IMF.
The Washington-based lender has stipulated a tax-revenue collection of Tk 143,640 crore for the July-December period.
Keeping the IMF target in mind, the government has planned a revenue collection target of Tk 420,000 crore, according to the finance ministry and IMF documents.
The IMF has also prescribed a budget deficit ceiling of Tk 114,110 crore for the first six months of the fiscal year. The government primarily earmarked a budget deficit of Tk 264,193 crore for the next fiscal year keeping the IMF deficit threshold in mind.
The government is also preparing the next budget keeping the other IMF conditions like reducing subsidies in different sectors including power and energy, reform measures to increase revenue collection and more focus on social spending including health and education.
The budget for the next fiscal year would most likely be Tk 750,165 crore, up from the current year's Tk 678,063 crore. The annual development programme getting a Tk 265,000 crore kitty.
The total revenue collection target would be Tk 486,000 crore, up from this fiscal year's Tk 433,000 crore.
The government is planning to achieve a 7.5 percent GDP growth and keep inflation within 6 percent.
"IMF did not give us any condition -- they gave us some suggestions. We are taking some steps which may match with the IMF suggestions," said Shamsul Alam, the state minister for planning.
The government's main objective is to keep the budget deficit within the limit and also rein in inflation, he said.
"We will provide the necessary budget support to increase agricultural production and keep the supply side uninterrupted," Alam added.
The IMF pressure is there but the reform initiatives that the Washington-based multilateral lender suggested should be considered in the budget, said Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue.
"The IMF suggestion to increase the revenue collection proportionately is something that we should do for our own interest as it only helps increase our fiscal space."
The government should not go for any populist measure keeping the next election in mind, he said.
"It might create a negative impact on the economy. In the current context, the best election budget should be focused on keeping the macro-economic stability and avoiding wasteful expenditure," he added.
Alam though said that the budget would not be election-focused.
"We will go to the voters showcasing what we have done in the last four and a half years," he said.