Bangladesh unveils Tk 6 trillion budget to ride out pandemic headwinds

Bangladesh has rolled out a Tk 6 trillion spending plan with the aim to breathe new life into a flagging economy following a year of tumult induced by the coronavirus pandemic.

Finance Minister AHM Mustafa Kamal on Thursday tabled the national budget for fiscal 2021-22 -- the biggest in the country's history -- in a brief parliamentary session due to the ongoing coronavirus crisis.

Continuing with the theme of safeguarding lives and livelihoods amid the pandemic, Kamal's third national budget of Tk 6.04 trillion, about 17.4 percent of the GDP, is about 12 percent higher than the revised outlay for the outgoing fiscal year. And it is a 6.34 percent increase from the original spending plan for the outgoing year.

Facing the headwinds of the crippling coronavirus pandemic for a second year, Kamal once again faces the task of keeping the economy afloat while at the same time charting a path to growth and expansion.

Special arrangements have been made to prevent the spread of the coronavirus during the ongoing budget session with Prime Minister Sheikh Hasina in attendance. MPs were once again seen wearing face masks and gloves while maintaining physical distancing norms.

In keeping with its vision of propelling Bangladesh to the status of a developed nation by 2041, the Awami League government placed greater emphasis on the development sector in previous years. However, that trend was bucked last year in the wake of the pandemic.

The Annual Development Programme to the tune of Tk 2.25 trillion has already been approved.

As the pandemic-ravaged economy appeared to be turning the tide late last year, hopes of a revival were dented by a second wave of the pandemic in 2021 which once again saw the country enter a lockdown.

Revenue collections have also fallen off the pace for the last two years as trade and commerce reels from the impact of the pandemic.

But the government is seeking to finance 64.45 percent of proposed expenditures from this sector, setting a revenue target of Tk 3.89 trillion, about an 11 percent increase over the current fiscal year.

However, the proposed budget runs a record deficit of Tk 2.15 trillion, or 6.2 percent of the GDP, crossing the conventional 'red line' of 5 percent gap, much of which will be offset by heavy borrowings from domestic and foreign sources. The government plans to borrow Tk 1.01 trillion from foreign sources and Tk 1.13 trillion from domestic sources to cover the shortfall.

In FY21, the government set a GDP growth target of 8.2 percent which was later revised down to 6.1 percent in light of the pandemic. This time, Kamal is hoping to achieve 7.2 percent growth while keeping the inflation rate at 5.3 percent through the implementation of the budget.

President Abdul Hamid had earlier authenticated the budget bill after it was approved by the cabinet.

The latest budget continues the trend of year-on-year growth in government spending with Kamal's maiden fiscal plan in 2019-20 that marked an 18 percent increase over the previous year’s revised budget.