FE Report
The caretaker government announces national budget for fiscal 2007-08 today (Thursday), which is expected to highlight realistic economic projections and envisage expansion of the social safety net, sources said.
Finance and planning adviser Mirza Azizul Islam, who will announce the new budget through state-owned and private electronic media at 3.0pm on the day, has long been saying that the new budget will be devoid of inflated projections.
He has emphasised on realistic projection to avoid problems in maintaining fiscal balance.
Such positive intentions of the caretaker government have already been reflected in actions when it set the annual development programme (ADP) at Tk 265 billion and annual revenue generation at Tk 438.50 billion for fiscal 2007-08.
This time the growth in revenue earning by National Board of Revenue (NBR) has been shown at 15 per cent against 19 per cent for fiscal 2006-07. The size of the new ADP is 22 per cent higher compared to more than 25 per cent previously.
The finance minister's recorded budget speech will be broadcast and telecast by the state-owned and private electronic media, sources added.
Only state-run electronic media will be allowed to record the speech at the office of the finance and planning adviser in the morning.
There is wide expectation among the members of the public about what measures the finance adviser will prescribe in the budget to contain the rising prices of essentials.
The finance and planning adviser has said that there will be some measures in the form of social safety net and food programmes in the new budget so that the lower income group are not affected by price hike of essentials.
Sources said the problem of the middle-income group may aggravate further as the NBR is likely to reduce the number of import products under the zero-duty regime.
Some capital machinery, tools and equipment of the agriculture and livestock, industrial raw materials, computer and computer related products may come under duty structure to boost revenue generation from the customs department.
The move will eventually increase production cost of home-grown products and fuel inflation, sources added.
However, the NBR is likely to focus more on curbing the income tax evasion rather than bringing major changes in the income tax slabs to increase generation from the direct tax.
The new budget may make provision of subsidy on diesel in addition to the existing fertiliser subsidy for the farmers.
The caretaker government has already devised a roadmap to provide the new farm subsidy through agricultural, water resources and rural development ministries, sources said.
It will be interesting to see the projection on budget deficit as the government has planned to inject fresh capital in the Bangladesh Petroleum Corporation (BPC).
The state-owed BPC owes the nationalised commercial banks nearly Tk 100 billion.
The recapitalisation of the BPC will see an increase in government non-development expenditure by Tk 10 billion as it has to make provision for payment of interest at 7.0 per cent annually in the budget.
Now, the government is set to absorb the BPC's outstanding dues in the budget that will eventually push up the total expenditure in the new budget at Tk 871.37 billion, which will show a budget deficit worth Tk 297.36 billion.
At the same time the new budget will show a total expenditure projection sans the BPC liabilities at Tk 796.14 billion. On this count, the budget deficit will stand at Tk 223.13 billion.