Falling oil prices, higher revenues may help cut budget deficit
Sunday, 12 October 2008
Shakhawat Hossain
Falling oil prices in the global market and higher revenue generation at home might help the government cut budget deficit below 4.5 per cent of the gross domestic product (GDP) from projected 4.99 per cent this fiscal year, finance ministry officials said Saturday.
Pressure on the finance ministry has eased after crude oil price plunged below US$ 80 per barrel from a record $147 per barrel in June.
Besides, almost 19 per cent revenue growth in the first quarter of the fiscal, two per cent higher than the target set for July-September period, will lead to a cut in fiscal deficit by 0.5 per cent of the GDP, they said.
Finance and planning adviser Mirza Azizul Islam in June last announced the country's highest ever deficit budget due to record spending of Tk 136.48 billion as subsidies on fuel oil, food and social safety net.
A total of Tk 999.92 billion has been projected for expenditure against the income of Tk 693.82 billion leaving a budget deficit of Tk 305.80 billion in fiscal 2008-09.
Some Tk 169.98 billion, or more than half of the deficit, has been shown as loans to be derived from the banking and non-banking sources.
But the dramatic fall in oil prices in the international market, almost 47 per cent in last two months, has already prompted the energy division to review the oil price in the domestic market and its projected budgetary subsidy.
"We are almost certain that budgetary subsidy on fuel oil import will not be more than Tk 40 billion against the projected Tk 61.06 billion," said a senior finance ministry official.
The official said besides, almost two per cent higher than the projected revenue earnings in the first quarter is a positive sign.
The NBR has already been asked to scale up its annual revenue target by some Tk 20.00 billion over the projected Tk 545.00 billion due to the growth, according to its chairman.
The NBR chairman said the revenue generation will rise further in the coming months and it will help the finance ministry shed its dependence on banking and non-banking sources for loans.
The finance ministry officials are worry about the possible poor flow of foreign loans by the multilateral lending agencies due to economic meltdown in western countries.
The foreign fund that has been projected at Tk 114.57 billion aims to offset 1.87 per cent of the budget deficit.
The economic relations division has already dispelled the finance ministry's fear saying that the possibility of a fall in foreign loans is less, they said.
Falling oil prices in the global market and higher revenue generation at home might help the government cut budget deficit below 4.5 per cent of the gross domestic product (GDP) from projected 4.99 per cent this fiscal year, finance ministry officials said Saturday.
Pressure on the finance ministry has eased after crude oil price plunged below US$ 80 per barrel from a record $147 per barrel in June.
Besides, almost 19 per cent revenue growth in the first quarter of the fiscal, two per cent higher than the target set for July-September period, will lead to a cut in fiscal deficit by 0.5 per cent of the GDP, they said.
Finance and planning adviser Mirza Azizul Islam in June last announced the country's highest ever deficit budget due to record spending of Tk 136.48 billion as subsidies on fuel oil, food and social safety net.
A total of Tk 999.92 billion has been projected for expenditure against the income of Tk 693.82 billion leaving a budget deficit of Tk 305.80 billion in fiscal 2008-09.
Some Tk 169.98 billion, or more than half of the deficit, has been shown as loans to be derived from the banking and non-banking sources.
But the dramatic fall in oil prices in the international market, almost 47 per cent in last two months, has already prompted the energy division to review the oil price in the domestic market and its projected budgetary subsidy.
"We are almost certain that budgetary subsidy on fuel oil import will not be more than Tk 40 billion against the projected Tk 61.06 billion," said a senior finance ministry official.
The official said besides, almost two per cent higher than the projected revenue earnings in the first quarter is a positive sign.
The NBR has already been asked to scale up its annual revenue target by some Tk 20.00 billion over the projected Tk 545.00 billion due to the growth, according to its chairman.
The NBR chairman said the revenue generation will rise further in the coming months and it will help the finance ministry shed its dependence on banking and non-banking sources for loans.
The finance ministry officials are worry about the possible poor flow of foreign loans by the multilateral lending agencies due to economic meltdown in western countries.
The foreign fund that has been projected at Tk 114.57 billion aims to offset 1.87 per cent of the budget deficit.
The economic relations division has already dispelled the finance ministry's fear saying that the possibility of a fall in foreign loans is less, they said.