The government plans to focus on nine areas of emphasis, including successful implementation of the COVID-19 stimulus packages announced by the prime minister, and ensuring additional allocation to boost the health sector with incentives and compensation, in formulating the budget for the 2021-22 fiscal.
The other prioritised pockets for the next fiscal are likely to be ensuring monetary allocation for government’s priority sectors to face the effects of the coronavirus pandemic, agricultural mechanisation and seed incentives, agricultural rehabilitation and continuation of subsidy in fertilisers for additional food production, and massive employment creation and rural development, reports UNB.
Expansion of social safety net programmes, housing projects for homeless poor people (main focus of Mujib Borsho) and continued distribution of food among the low income group free or at minimum price would also get priority in 2021-22 fiscal budget.
Besides, overall human resource development including education and skill development will be another priority area.
Finance Ministry sources said that the first meeting of the coordination council on budget management and finance and currency exchange rate was held virtually recently with Finance Minister AHM Mustafa Kamal in the chair. The initial parameters of the budget for 2021-22 were decided at this meeting.
In the meeting, the GDP rate was preliminarily estimated at 7.7%, inflation rate estimated 5.3%, total investment rate 32% of the GDP (private 24.5% while 7.5% public) and total revenue collection estimated 10.8% of the GDP.
It also estimated that the total expenditure for the next fiscal would be 16.7% of the GDP while total budget deficit likely to be 5.8% of the GDP and primary deficit would be 4% of the GDP. The amount of the GDP would be Tk 35,52,778 crore.
According to sources in the Finance Ministry, the priorities have been set considering ongoing COVID-19 pandemic and its second wave.
To bring the economic activities back on track, the government announced stimulus packages worth USD 14.1 billion, equivalent to around 4.3 percent of the country’s GDP, in the last quarter of the 2019-20 fiscal.
These packages included incentives for export-intensive industries, funds for safety and security of the workers, working capital for Small and Medium Enterprises, loan facilities for export growth, assistance to farmers and agriculture, loan for employment generation, interest relief for the affected business enterprises, refinancing schemes and insurance for the health workers.
For implementing the stimulus packages, the government had rolled out four work plans over the immediate, short and long terms basis to offset the possible adverse impact on the country’s economy.
These include increasing public expenditure, introducing fiscal packages, expanding social safety net programme and increasing the money supply.
In public expenditure, job creation was given priority and foreign trips and luxury expenses were discouraged.
As the loan-GDP ratio of the country at just 34 percent gives it breathing space, the government can afford to explore deficit financing for excess public expenditure without significantly impacting the macroeconomy.
Through the banking system, some loan facilities were introduced with lower interest rates. The main aim of these loans was to revive the economic activities, keep workers and employees in their respective works and keep intact the capability and competitiveness of entrepreneurs.
To meet the basic rights of people living below the poverty line, day-labourers and those involved in non-formal activities, the government expanded its social safety net programme.
About increasing the money supply, Bangladesh Bank has reduced the CRR and Repo to increase the flow of money which will continue in the coming days as per the demand.