Social Safety Net Allocation Faces Constraints Amid Inflation

The three-day shutdown and subsequent violence over the quota reform movement have severely disrupted Bangladesh's economy, already struggling with high inflation, falling exports, and dwindling forex reserves. Factories, including the key garment sector, shut down, fearing further violence and arson.

Government entities are projected to incur expenses 4.68 times higher than the total loss of Tk 5,989.57 crore incurred in FY24, according to projections made by a monitoring cell of the Finance Division under the Ministry of Finance.

In order to stop tax evasion and avoidance, Mauritius and Bangladesh have signed an additional agreement to their Double Taxation Avoidance Treaty (DTAA). The following significant modifications are included in the rules, which will take effect on July 1, 2025.

The finance ministry of Bangladesh has suspended the block allocation expenditure for FY 2024-25 to reduce government spending amid challenging economic conditions. This year's allocation was Tk 6,256 crore, down from Tk 7,285 crore in FY 2023-24. A directive issued on July 4 restricts various government expenditures, including foreign travel.

State-owned enterprises in Bangladesh are projected to see their losses increase significantly in the current fiscal year compared to the previous one. A government analysis of 50 entities across various sectors reveals an estimated total loss of Tk 28,047.97 crore for FY 2024-25, marking a 4.68-fold rise from Tk 5,989.87 crore in FY 2023-24. Despite total earnings of Tk 401,689.01 crore, expenses are expected to reach Tk 429,736.98 crore this fiscal year.

Net sales of national savings certificates (NSC) in Bangladesh saw a sharp decline in the July-May period of FY24, registering negative Tk 17,742 crore compared to negative Tk 3,028 crore in the same period last fiscal year. In May alone, NSC net sales dropped to negative Tk 3,094 crore from a positive Tk 551 crore a year earlier.