National Budget FY25 highlights moderate GDP growth, inflation, jobs and smart Bangladesh

Finance Minister Abul Hassan Mahmood Ali on Thursday unveiled the national budget for FY2024-25 in the Parliament proposing an expenditure of Tk 7970 billion with a revenue income of Tk 5410 billion.

This left a deficit of Tk 2560 billion, said Ali in his maiden budget speech as the finance minister.

He proposed to meet the gap with the collection of Tk 1,60,900 billion from domestic sources and another Tk 95,100 billion from foreign sources.

This is the first national budget for the current Awami League government of Prime Minister Sheikh Hasina since it assumed office early this year after sweeping the January 7 general election.

While preparing the budget the government faced the challenges of inflation, declining foreign exchange reserves, and dwindling exports and imports.

In the fiscal year beginning July 1, the finance minister expects that the economy will grow by 6.75 per cent, a percentage point higher than the outgoing year. This year’s GDP has been estimated at 5.82 per cent, down from the original projection of 7.5 per cent.

Ali has been hopeful of taming the inflation at 6.5 per cent during FY2024-25, which may prove a tall order in the context of the current level of inflation at about 10 per cent.

For the upcoming fiscal year, the government has already approved an Annual Development Program (ADP) of Tk 2650 billion.

Ali said, “While allocating resources emphasis has been given to resource allocation for Annual Development Program for investment and development of physical infrastructure.”

In addition, he said, “special importance has been given to compulsory education, health, science and technology for the development of human resource and knowledge-based society.”

The proposed spending has been split into three divisions: Social infrastructure, physical infrastructure and common service sector. A total allocation of Tk 2,06,569 has been proposed for the social infrastructure, which is 25.92 per cent of the total allocation. Physical infrastructure has received an allocation of 2161.11 billion has been proposed, which is 21.12 per cent of the total outlay. For the common service sector, an allocation of Tk 1687.01 billion has been proposed.

Mentioning that there has been a significant depreciation of taka currency against US dollars following the rise in interest rates, the finance minister said the expenditure on interest payments may increase significantly in this context.

For debt payments, the proposed budget has allocated a total of Tk 1135 billion, which accounts for 14.24 per cent of the total allocation.

Finance Minister Ali told the Parliament that in the formulation of the budget he has laid emphasis on taming inflation, the adequate allocation for education and health services for all, food security, building smart Bangladesh, graduation from LDC status, facilitation of the business process, climate change, expansion of investment and industry by encouraging private enterprises.

“…special priority has been given to important issues like ensuring youth employment by promoting vocational education and protecting the population lacking social security,” Ali said.

The finance minister has aptly captioned his budget speech as a “March towards smart Bangladesh following the path of sustainable development.

There have been enough allocations for the development of skilled human resources as “smart citizens will be instrumental to building a prosperous and smart Bangladesh by 2041”, a goal set by Prime Minister Sheikh Hasina.