Bangladesh’s budget deficit projection for FY24 could face challenges if economic growth falls short of expectations, warns a report by Fitch Ratings. Historically, fiscal outcomes in Bangladesh have deviated from budget forecasts due to underspending against targets. Revised figures for FY23 showed a budget deficit of 5.1% of GDP, lower than the initial target of 5.5%. Fitch’s report highlights weaker-than-expected development spending but higher revenue collection, offsetting increased subsidy spending. The government projects a slight widening of the deficit to 5.2% of GDP in FY24, while Fitch forecasts 5.3%. Risks to the deficit could arise if real GDP growth falls below the targeted 7.5%. The report also emphasizes the need to raise revenue, as Bangladesh’s revenue ratio remains low compared to its peers. The government aims to enhance compliance and revenue collection through risk-management units and automation of tax administration.
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