The ongoing economic crisis in the country has not been taken into consideration in the proposed national budget for FY2024-25, said the think-tank the Center for Policy Dialogue (CPD).
“Ambitious targets for growth in gross domestic product (GDP) and private sector investment and reduction in inflation have been announced as the proposed budget seems to have been prepared without addressing real crises,” CPD Executive Director Dr Fahmida Khatun said in a press conference organised by the think-tank to highlight the analysis of the proposed budget on Friday (7 June).
“The ongoing crisis may intensify due to various initiatives taken to deal with the crisis without investigating the problem,” she added.
Presenting the main article, Dr Fahmida Khatun said that the economy has been under pressure for more than two years.
“At this time, problems like missing revenue targets, low expenditure, excess bank debt of the government, liquidity crisis, downward export growth, reserve crisis, contraction in imports, and depreciation in currency exchange rate have become evident,” she said.
Inflation control, foreign currency reserves and exchange rate adjustment are necessary to fix these unstable indicators, but the government is keeping an extra eye on growth, the economist noted.
Stating that the target set in the proposed budget does not match with reality, she said, “Although there is a target of 7.5% growth in the current financial year, it has come down to 5.8% as a preliminary, according to BBS.”
In this situation, she said that the proposed budget does not have the logistics to improve the GDP growth to 6.75% in the next financial year.
Dr Fahmida said in order to achieve the growth target, the amount of private investment should be increased from about 23% of GDP to more than 27%.
She said the private sector credit growth target has been reduced to 10% from 15%, it will be difficult to increase investment as the target of growth in personal loans is further reduced.
“The economy may face several pressures including failure to meet the growth target due to the government's loan from the banking system to finance the deficit,” she added.
She said if the government borrows from banks, the flow of credit to the private sector will stop and industrialisation will be hindered.
Again, due to relatively high interest, if internal borrowing is high, the interest cost will also increase, the economist said.
Commenting on the proposed revenue collection for the new year, Dr Fahmida said, “The revised target for collection in this sector is 13% from Tk4,78,000 crore to Tk5,41,000 crore in the next financial year. But the reality is that only Tk4,25,000 crores of revenue can be collected this time. To meet the new year target, the collection will have to increase by around 27.3%.”
CPD also said the target of raising foreign reserves to $32 billion by the end of the year will not be met.
It said there are currently no exports or remittance flows to increase reserves beyond $24.2 billion.
CPD Distinguished Fellow Professor Mustafizur Rahman and other researchers were present at the press conference.
