Tuesday, June 2, 2020 | ePaper

Budget deficit to swell amid coronavirus fallout

  • Print
Special Correspondent :
The country's budget deficit is going to set up new record in the upcoming financial year due to the fallout of the Covid-19 pandemic, economists said on Friday.
They said, revenue will come under "heavy pressure" in the next financial year due to the disrupted businesses for lockdown and it may force the government to look towards additional borrowing to fund its expenditure raising.
"Bangladesh's fiscal deficit in 2020-21 fiscal may shoot up to 6.0 per cent of the GDP. It is because of both revenue shortfall and expenditure increases amid economic downturn of coronavirus, said Dr Zahid Hussain, former lead economist of the World Bank's Dhaka office.
The World Bank has recently said Bangladesh's budget deficit might swell to 7.7 per cent of the Gross Domestic Product (GDP) during the current fiscal year, highest in the last one and a half decades.
The deficit in FY2021 will go up to a new height of 9.8 per cent of the GDP, the Washington-based lender forecast.
"To meet the budget deficit, the government may heavily rely on bank borrowing and loan from various domestic sources. But the government should be careful about an approach  in deficit financing to maintain fiscal dicipline and avert risk," said said Dr Zahid Hussain.
The size of the next annual budget has been estimated for Tk 5,60,000 crore with Tk 3,95,000 crore revenue collection target. However, the deficit has been projected Tk 1,75,000 crore.
The government has primarily set Tk 70,000 crore borrowing target from banks, Tk 72,000 crore from foreign sources and Tk 33,000 crore from savings
"The budget deficit would go up in the next fiscal as the government needs investments in new areas alongside the regular expenditure on different sectors in view of coronavirus pandemic," said Dr Ahsan H Mansur, Executive Director of the Policy Research Institute.
He said the government should look for external funds to meet the budget deficit when heavy internal borrowing raise risk of economic imbalances.
"The government's revenue collection will remain weak in the next fiscal year as a result of a sharp virus-driven downturn in economic activity," he added.
The Centre for Policy Dialogue, CPD, predicts a Tk 1.0 trillion revenue collection shortfall this fiscal considering the impact of COVID-19 on the economy.
The CPD predicts revenue loss and increased public expenditure for a virus package would widen fiscal deficit to 5.5 per cent or above of GDP this fiscal.
"Strengthening the social safety should be given the highest priority in the next budget to feed the million victims of the ongoing coronavirus lockdown. Besides, higher allocation for health, agriculture and rural development are necessary to tackle the health emergency as well as to boost the national economy," said Dr Ahsan H Mansur.
The coronavirus pandemic has weakened the country's success in reducing the poverty over the past decade. For this, the government will pay special attention to social safety net and agriculture in the upcoming budget. Allocations in these sectors may be doubled in the upcoming budget, the official further said.

More News For this Category

Thousands of passengers throng Sadarghat Launch Terminal on Monday with total disregard to physical distancing norms.

Thousands of passengers throng Sadarghat Launch Terminal on Monday with total disregard to physical distancing norms.

22 more die, 2,381 test corona positive

Staff Reporter :Bangladesh reported 22 more deaths from coronavirus in the past 24 hours, taking the death toll in the country to 672.Besides, the confirmed coronavirus cases have jumped to

‘Individual's safety to be highly ensured this hazardous situation’

Reza Mahmud :Without curb in coronavirus spread, the government on Sunday reopened offices, workplaces and public transports. The member of contaminations from the virus are above 2000 every day and

Fatalities from coronavirus climb to 3,74,405 globally

News Desk :Total fatalities from Covid-19 climbed to 3,74,405 globally while infected 62,94,050 in 210 countries and territories and recovered 28,64,641, according to worldometer.Total fatalities from Covid-19 in the United

Bangladesh to be divided into red, green and yellow zones

Staff Reporter :Health Minister Zahid Maleque has said the entire country will be divided into three zones-red, yellow and green considering the rate of infections and death.He told it to

BB sues RCBC, Bloomberry Resorts anew for 2016 bank heist

CNN  :Bangladesh central bank filed a fresh case against Bloomberry Resorts and Hotels Inc and 16 others before a New York State Court.Bangladesh authorities have renewed their bid to recover

Libya tragedy Perpetrators to be brought to justice, says Libyan govt

Staff Reporter  :The Libyan government has strongly condemned the killing of Bangladesh citizens in Libya and vowed to bring the perpetrators to justice.The Libyan Ministry of Foreign Affairs termed the

Human trafficker held in city

Staff Reporter  :Rapid Action Battalion (Rab) members have arrested the ringleader of a human trafficking gang from Khilbarirtek of Shahadatpur area in the city early Monday in connection with the

80pc people might be infected with coronavirus, says Dr Bijon

80pc people might be infected with coronavirus, says Dr Bijon

Staff Reporter :Claiming that country's 30-40 percent people have already contracted coronavirus, Dr Bijon Kumar Sil, chief of the Gonoshasthaya Kendra team which invented Covid-19 testing kits, said 80 percent

Trump took shelter in White House bunker as protests raged

AP, Washington :Secret Service agents rushed President Donald Trump to a White House bunker on Friday night as hundreds of protesters gathered outside the executive mansion, some of them throwing