Covid-19 to push next budget size up by 10%

The allocation for the next budget will be 10 percent bigger than the current one, given the ongoing unpredictability of the Covid-19 pandemic.

The size for the fiscal year 2021-2022 budget is expected to be around Tk 625,000 crore, up from Tk 568,000 crore set in the FY 2020-2021 budget, according to finance ministry officials involved in the budget preparation.

Taking the pandemic situation into account, the upcoming budget size will be more dynamic and larger than the preceding one to create jobs and revitalize the economy.

The government will not be cutting back on its development spending rather it plans to allocate more Covid-19 stimulus funds for economic recovery.

The health sector will be given special importance to save lives from the deadly coronavirus in the new budget. In the current budget, some Tk 29,250 crore has been allocated to the health sector, up 13.7 percent from Tk 25,730 crore in the previous budget.

Apart from the health sector, the budget will attach importance to generating more employment opportunities and raising investment, implementation of 10 megaprojects, including Padma Bridge—the largest ever infrastructure project in Bangladesh.

The budget preparation process will start in the first week of next month---much earlier than the usual time.

The budget management committee and fiscal coordination council will hold two zoom platform meetings separately on December 31. Finance Minister AHM Mustafa Kamal, who is now in Singapore, is expected to join the events virtually.

The meeting is expected to discuss the present budget spending performance and next fiscal year’s spending forecast against the backdrop of economic losses battered by the pandemic.

“The work to set a new budget will start mainly focusing on tackling the fallout of deadly coronavirus pandemic, picking up the economy and planning for the more stimulus package,” Dr. Azizul Alam, the additional secretary to the finance ministry, told Business Insider.

To finance the budget deficit, he said, the loans and grants in large amounts would be sought from the donor agencies such as the World Bank Group and the IMF.

A source said the government aims to keep the budget deficit at 7-8 percent for the next fiscal year.

Instead of passing tax burden on the citizens, the government is emphasizing to opt for taking foreign assistance and loans to meet the huge budget deficit and to manage the expenditure, said an official.

In the next budget, 10 million people will be brought under the social safety net programmes. For this the government plans to spend Tk 1 lakh crore will be allocated in the next budget, which is the highest ever, sources said.

In the current budget, Tk 76,500 cro re has been allocated for the social safety net programmes.

Meanwhile, the finance ministry recently asked the ministries and agencies to exercise austerity in spending public money.

No motor vehicles will be allowed to purchase until June 30, 2021. Travel expenses of officials and staffers have been reduced by 50 percent and all ministries have also been asked to cut their development expenditures by 25 percent in the current fiscal year, according to a notice of the ministry.

At an event on finalising the 8th Fifth Year Plan on Wednesday, Prime Minister Sheikh Hasina directed the finance ministry and other related ministries and divisions to formulate a second fiscal stimulus package plan keeping the second wave of COVID-19 in mind.

The stimulus packages had been announced at different times after March. The government declared 21 stimulus packages involving more than Tk 1,21,000 crore to weather the pandemic fallout, 39.23 percent of the total amount, or Tk 47,615 crore was disbursed until October 31.