Hefty borrowings on cards for next fyÃ¢€™s draft budgetNazmul Ahsan
The Finance Ministry has taken the task of preparing the draft budget for fiscal 2014-15 depending on hefty borrowings from the banks to meet the deficits.
According to the Finance Ministry estimates in fiscal 2014-15 the deficit could reach Tk 67,353 crore, equivalent to five per cent of the gross domestic product, up from current fiscal’s 4.6 per cent.
And the finance ministry plans to meet Tk 43,160 crore from domestic borrowings, Tk 32,947 crore from banks and the rest from non-banking sources including savings instruments, show the draft budget document.
The poor possibility of receiving the needed low-cost project finances from abroad led the finance ministry to plan hefty bank borrowings, said officials.
Finance Minister AMA Muhith approved the draft budget outline for the next fiscal, but asked for vigorous drives to secure assistance from abroad to cut down the burden the government would otherwise have to shoulder, a finance ministry official told New Age Saturday.
Muhith also stressed the need for securing the huge project assistance in the pipe-line to avoid increased government borrowings that would crowd out private investment, he said.
The draft budget for the next fiscal, the preparation of which has been taken at hand seven months before the current fiscal ends in June 2014, on the assumption that an ambitious eight per cent GDP growth would be achieved in 2014-15 keeping inflation at six per cent.
The exercise has begun amid poor macro-economic outlook.
‘When national earnings decrease, evaluation for a given period generally takes place earlier,’ a budget official told New Age referring to current fiscal’s probable revenue shortfall of between Tk 10,000 crore and Tk 13,000 crore from the NBR portion.
The shortfall could increase to Tk 18,000 crore or Tk 20,000 crore if revenue collection from non-NBR and non-tax heads follow NBR’s collection trends in a business environment made gloomy by prevailing political turbulence, the official added.
Officials said that 80 per cent of the government’s revenue comes from the NBR portion which includes customs, income tax, VAT, and the rest from non-NBR sources like vehicle duty, stamp duty and road tax and the like and non-tax sources like service charges and various registration fees.
Officials said that they were drafting the budget on the expectation that the government would receive Tk 24,200 crore in loans from abroad.
At a recent meeting NBR high officials informed the finance minister that customs duty collection could fall short by Tk 6,000 crore
to Tk 7,000 crore , value added tax by Tk 3,000 crore to Tk 4,000 crore and income tax by Tk 1,000 crore to Tk 2,000 crore in the current fiscal.
For the current fiscal, the government set the revenue collection target at Tk 1,36,090 crore.
The government borrowed from the banks Tk 5,000 crore in the first four months of the current fiscal.
And there is every possibility that the government’s borrowings from the banks could exceed the target of Tk 25,993 crore set for the fiscal, said a senior finance ministry official.
He said the deficit in the current fiscal’s revised budget could exceed 4.6 per cent of the GDP, the target for the year, amid soaring revenue expenditures and shrinking earnings.
Going by the trend, he said, ‘The deficit could increase substantially in the next fiscal forcing the government to borrow more from the banks.
The economic outlook would depend on political developments in the coming days, he said.
The political developments are bound to impact the national economy and budget preparations, he said.
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