Budget deficit unchanged at 5pc of GDP
Budget deficit in the next fiscal year will stand at 5 percent of GDP, up about 1.0 percentage point from the revised budget of the outgoing fiscal 2008-09, as the size of the overall outlay declined to Tk 94,140 crore after revision from Tk 99,962 crore.
The government will have to face an overall deficit of Tk 34,359 crore in implementing the more than Tk 1,13000 crore budget next fiscal year (2009-10).
However in the original budget for FY2008-09 total budget deficit was kept at 5 percent of GDP.
The government wants to meet majority of the deficit through borrowing from domestic sources including banks and non-bank financial institutions.
It wants to collect the remaining portion of funds by borrowing from foreign sources.
Economists observe that the deficit at 5 percent of GDP is a relatively safe limit in maintaining macroeconomic balance. A rise in the budget deficit of more than 5 percent is said to hurt balance of overall economy by affecting inflation and investment.
Finance Minister AMA Muhith in his budget proposal said the non-development expenditure was revised downward due to a collapse in prices of food, fuel and fertiliser in the international market despite providing allocation in the form of additional subsidies for fertiliser, power and exports.
“As a result, the overall budget deficit in the revised budget for FY2008-09 will stand at 4.1 percent of GDP. Of this, 2.3 percent will be financed from domestic sources and the remaining 1.8 percent from external sources,” he said.
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