In order to implement the Tk 6.04 trillion budget, Finance Minister AHM Mustafa Kamal will have to overcome the challenge of increasing revenue collection and rely on loans for a third of budget financing.
Bangladesh had set a growth target of 8.2 percent in FY 2019-20, Kamal said in his budget speech. But the economy took a big hit at the end of the fiscal year due to the pandemic. The country’s economy grew by 5.24 percent that year, according to government calculations.
The finance minister had again set a target of 8.2 percent GDP growth for fiscal 2020-21 but the number had to be revised down to 6.1 percent as the economy went through a difficult phase.
The World Bank forecasts Bangladesh could achieve 3.6 percent growth this year, and if the pace of economic recovery is right, it could increase to 5.1 percent in the next fiscal year and 6.2 percent in the year after.
Bangladesh’s economy is showing nascent signs of recovery backed by a rebound in exports, strong remittance inflows, and the vaccination programme, the World Bank said in a report in April.
“After being severely affected by the COVID 19 pandemic -- which slowed growth and for the first time in two decades reversed the poverty reduction trend -- the economy is recovering gradually,” it said.
Over the first half of FY21, factories reopened and exports rebounded. However, the economy faces elevated risks in the context of the ongoing COVID-19 pandemic.
The International Monetary Fund has said Bangladesh's growth could be 5 percent in the current fiscal year and it may increase to 7.5 percent next year.