With election and a new government in sight in a couple of months, the interim incumbent seems edgy as it downsizes the current fiscal budget while sets sights high in calculating the next one.
A meeting of the committee for coordination on fiscal, monetary, and currency exchange and resource management on Monday, chaired by Finance Adviser Dr Salehuddin Ahmed, decided to revise down the current budget by around Tk 150 billion from a total outlay of Tk 7.9 trillion, sources said.
The reset of the 2025-26 budget reflects a slowdown in economic activity in numerous sectors on the cusp of transition from the interim regime installed through the 2024 'July Mass Uprising', and the stopgap administration revises up and down major economic parameters for the outgoing year.
In light of the ground realities, the meeting decides to revise up the inflation target to 7.0 per cent from the actual target of 6.5 per cent. And the new growth target of gross domestic products has now lowered down to 5.0 per cent from budgetary target of 5.5 per cent.
"We can't predict the choice of the coming political government. So, we are keeping the window open for them to decide how much to spend instead of cutting the budget drastically," a senior finance division official who attended the meeting told The Financial Express.
He mentions that the budget for the fiscal year 2024-25 was revised down by Tk 500 billion as spending was low.
"But this time around, the general election is taking place in February, involving some extra spending. Moreover, the new government, after assuming office, may change priorities and so may need higher budget," he says.
However, the official adds, the interim administration prefers to continue the contractionary policy in spending throughout the year.
Another finance official says the central bank officials who attended the meeting wanted to continue contractionary policy and thus preferred not to lower policy rate now in order to lower the rate of inflation further.
The meeting has noted that the revenue collection has been increasing in the recent months and emphasised efforts to further enhance the revenue mobilisation.
In this case, the meeting discussed the preference on the International Monetary Fund (IMF) lending condition to enhance tax-to-GDP ratio which, for Bangladesh, is still below 8.0 per cent, until now.
Sources say the meeting has also prepared an outline for the next fiscal budget, amounting to around Tk 8.5 trillion in size.
The GDP-growth target has been set at 6.0 per cent for the upcoming fiscal year while the rate of inflation is targeted to be 6.0 per cent, officials said.
syful-islam@outlook.com
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