Proposed national budget for FY 2020-21 to address COVID-19 cracks

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Finance Minister AHM Mustafa Kamal is set to unveil tomorrow (11 June 2020) the proposed budget for the 2020-21 fiscal year expected to contain suggestive measures to offset COVID-19 impact on the country’s economy as the pandemic’s onslaughts continued to hit hard the global financial system.


Officials familiar with the preparations of the fiscal document said despite the ongoing pandemic the budget size would be Taka 5.68 lakh crore, an amount which was a little higher than that of the previous fiscal. The previous fiscal’s budget was around Taka 5.23 lakh crore.


The Finance Division has estimated an overall possible revenue collection target of Taka 3,78,003 crore for the next fiscal.

Of the amount Taka 15,000 crore is expected to be drawn from the taxable sector and Taka 33,003 crore from the non-taxable sector beyond the National Board of Revenue (NBR) target.

Officials said the government was also eying for an estimated amount of Taka 4,013 crore as a foreign grant.


They said NBR set a target of mobilizing Taka 3,30,000 crore as revenue in the next fiscal expanding tax nets to augment government income.

The government may increase the tax-free income limit for individual taxpayers while the income tax slabs may be rearranged as well.

They said the weird situation simultaneously forced the government to contemplate the reduction of corporate tax alongside granting full amnesty to black money-holders.


The officials said the government simultaneously expected an 8.2 percent GDP growth in the coming fiscal despite different global financial watchdogs’ predictions that the deadly virus would pull down the growth in South Asia and Pacific regions.

They, however, estimated the budget deficit to be nearly 6 percent, a little over the usual average of 5 percent estimated during the previous years.


But, the situation required the proposed budget to be more welfare-oriented so more money could be spent on the poorer people whose life and livelihood was affected by the pandemic.

“The Finance Minister’s a budget address this year is likely to be different from other years . . . this is not going to be a conventional budget, anyway” a senior finance ministry official said preferring anonymity.

He said Kamal was likely to unveil a three-phase strategy to address the pandemic effect in terms of duration of stimulus package plans to be categorized as “short, medium, and long” ones.

Officials said the budget would also tend to continue the incumbent government’s achievements but synchronize them with the reality caused by the ongoing crisis.


“The budget will seek to explore ways to expand social safety net coverage under different ongoing programs to accommodate an extra number of beneficiaries,” an official said quoting the expected amount of allocation for the purpose to be as high as Taka 32,166 crore.

The number of beneficiaries on working lactating mothers, poor mothers, tea workers, plus members of the third gender and Bede communities might increase to 13 lakh in the next financial year.


The government is likely to set a Taka 1,09,980 crore borrowing target from the domestic sources to meet the deficit, of which Taka 84,980 crore will be taken from the banking sector alone.

The non-banking sources and modes like savings certificates are thought to be means to cater the rest portion of the deficit.

According to the officials the government was likely to borrow Taka 88,824 crore from foreign sources in the new fiscal but Taka 12,820 crore of the amount would be spent for loan repayment.


The government next year is likely to spend Taka 63,801 crore on interest payments. Of this, Taka 58,253 crore will be spent to pay interest on domestic loans while Taka 5,548 crore on foreign loans.

The amount of government’s capital expenditure in the coming fiscal is likely to be Taka 36,990 crore, while Taka 567 crore could be on food and Taka 4,210 crore on loans and advances.


The government for the first time in decades planned not to increase the Annual Development Programme (ADP) much but to keep that at Taka 2,05, 145 crore compared to Taka 2,02,721 in the outgoing fiscal.

Besides, an amount of Taka 4,722 crore would be spent for special projects outside ADP, Taka 2,654 crore for food-for-work programme and Taka 2,522 crore for various other schemes.


The agriculture sector is likely to get a higher chunk of allocation alongside arenas of social security, public administration, education, power, and communication.

Officials said out of the overall budgetary allocation, the health sector is likely to receive an allocation of 5.1 percent, social safety net sector 4.7 percent, and public administration sector 6.8 percent.


Local government and rural development sector may get 6.10 percent, defense sector 5.4 percent, public discipline and security 4.9 percent, power sector 4.8 percent, education and technology 15 percent, agriculture 3.6 percent and transport sector 11.4 percent.


Among the ministry wise allocation, the local government division is likely to receive the largest slice for eight consecutive years.

This will be Kamal’s second budget to be placed in parliament as he became the Finance Minister nearly two years ago.

He is scheduled to hold as well a post-budget press conference on June 12 through video conferencing.


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