3 months ago

Budget deficit widens on lower revenue receipt

July-Dec shortfall stands at Tk 101.66b

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Government budget deficit widened in the first six months of the current fiscal year on narrowing revenue receipt, finance officials said Thursday, while economists forecast no better scenario ahead.

The budget deficit was recorded up to December at Tk 101.66 billion amid lower revenue collection, official statistics show. The deficit was at Tk 71.53 billion up to November.

The total revenue mobilisation was recorded at Tk 1.613 trillion up to December, down by nearly Tk 50 billion from the same period a year earlier. The total expenditure was Tk 1.715 trillion during the period under review.

In the official accounting tax revenue was recorded at about Tk 1.449 trillion, down by 3.3 per cent year on year. Non-tax revenue (NTR), however, remained almost at par during the July-December period at Tk 163.87 billion.

On the other side of the budget arithmetic, non-development expenditure increased to Tk 1.262 trillion during the period.

The annual development programme or ADP expenditure was trimmed to Tk 352.61 billion. It was Tk 370.73 billion a year earlier.

The latest government report shows for FY23 shows actual overall balance up to December 2022 (excluding grants) witnessed a negative value which was 0.23 percent of the GDP. The negative value was 0.16 per cent of the GDP up to November last.

Economists are of the view that the fiscal side will face troubles in the coming months as the revenue performance remained much lower than expected.

They note that the government will have to go for higher spending by avoiding austerity in some areas like payments for power and debt servicing, in order to ramp up revenue mobilisation.

Dr Ahsan H. Mansur, executive director at the Policy Research Institute of Bangladesh (PRI), told the FE that ultimately the deficit would cross Tk 1.0 trillion at the end of the fiscal year.

"Some power-related expenditures and debt servicing, both domestic and foreign, should be defrayed within the fiscal year," he said. Power producers will not wait for a long time.

Dr M. Masrur Reaz, chairman of Policy Exchange of Bangladesh, notes that imports have now gone down. As a result, the revenue mobilisation from imports is falling now.

The government also earns revenues from development projects as VAT and other taxes. But many projects funding now remained suspended. "So it will affect the resource mobilisation largely," he says.

He also forecasts that the deficit will widen in the months ahead.

Finance Minister AHM Mustafa Kamal placed the national budget worth Tk 6.78 trillion for the current fiscal year. The budget estimated development expenditures at Tk 2.59 trillion and non-development expenditures at Tk 4.11 trillion.

The overall budget deficit for the fiscal year (FY) 2022-23 was estimated at Tk2.42 trillion, or 5.4 percent of the gross domestic product or GDP.

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