Social Safety Net Allocation Faces Constraints Amid Inflation

Finance Minister AHM Mustafa Kamal has presented the budget for fiscal year 2023-2024, proposing a total allocation of Tk113,576 crore for social safety net programs. This accounts for 16.75% of the total budget and 2.55% of GDP. The Ministry of Finance aims to expand the social safety net by including an additional 7.35 lakh beneficiaries, providing support to the elderly, widows, and disabled individuals.

The upcoming 2023-24 fiscal year's Annual Development Programme (ADP) will incorporate 79 public-private partnership (PPP) projects, as announced by the government. These projects require a total investment of Tk 2,36,821 crore for successful implementation. The decision to include these projects in the ADP aims to facilitate their execution through PPP initiatives. Private individuals or organizations interested in undertaking new projects must go through the PPP Authority for processing.

The government is contemplating classifying tax exemptions as subsidies, a move that has drawn skepticism from economists and policy analysts. Sources at the National Board of Revenue reveal that the government's estimated direct tax expenditure in the upcoming fiscal year (FY24) could reach Tk1.78 lakh crore, while direct government subsidies might stand at Tk1.10 lakh crore. By categorizing tax exemptions as subsidies, the total subsidy amount would reach Tk2.90 lakh crore in the next fiscal year.

The upcoming budget for the fiscal year 2023-24 in Bangladesh is highly anticipated by the low and middle-income segments and businesses alike. The focus lies on restoring the affordability of essential commodities and addressing skyrocketing inflation that has affected food and nutrition accessibility for millions. To retain export growth, investments, and employment, industry leaders seek a more investment-friendly environment reflected in the tax policy.

Bangladesh's government is expected to fall short of fully implementing its national budget for the 14th consecutive year due to over-optimism and a lack of capacity in public agencies. The inability to utilize allocated funds hampers the country's progress and potential benefits. In the ongoing fiscal year, the government has revised its expenditure plan to Tk 6.60 lakh crore, representing 97% of the initial target.

The government is set to present the proposed budget for the fiscal year 2023-24 with a target of Tk 500,000 crore government income. Finance Minister AHM Mustafa Kamal will unveil the budget in the Jatiya Sangsad. The total budget is projected to be Tk 761,785 crore, with a deficit of Tk 261,785 crore, accounting for 34.36% of the total budget and 5.2% of the GDP.