T-bill yield decreases

For the following fiscal year (FY 2023–2024), the government is projected to propose a budget that is 13.5 percent bigger and includes greater subsidies and debt-servicing expenses. A 35 percent increase in subsidies and incentives, a 27 percent increase in funding for debt service, and a 6.0 percent increase in annual development program would account for the larger outlay. According to representatives of the Finance Division, the FY 24 budget may be Tk 7.698 trillion, up from the current outlay of Tk 6.78 trillion, which represents a 12-percent increase from the prior year.

The annual development program implementation rate fell to about 32% in the first eight months of the current fiscal year, which is at least a five-year low. Against a budget of Tk 2,56,003 crore, a total of 54 ministries and divisions spent around Tk 82,170 crore between July and February, according to the monthly update published by the Implementation, Monitoring, and Evaluation Division last week.

The European Union (EU) will implement the new rules of preferential market facilities or GSP from the next year 2024. According to the proposed new GSP regulation, there are some tough conditions for getting duty-free benefits for Bangladeshi products. As a consequence, the Ministry of Commerce fears that the export of the country may be hindered due to the imposition of various new rules and making the conditions of the Rules of Origin difficult. Under such circumstances, a five-member delegation led by Chief Secretary to the Prime Minister has reached Europe to request the relaxation of various conditions proposed for GSP.

In the eight months leading up to February 28 of the current fiscal year 2022–23, the government borrowed Tk 45,437 crore from the Bangladesh Bank, which could exacerbate the country's inflationary pressure. According to BB data, the total amount of outstanding government loans from the banking industry increased to Tk 2,10,274 crore at the end of February from Tk 1,96,608 crore in December 2022.

The government will increase operating expenses in the amended budget for the current fiscal year, proving that their austerity or prudent spending strategy in the face of recent economic shocks is unsustainable. However, the government has reduced the development spending, which is typically thought of as the economic growth engine, in the upcoming amended national budget, authorities said. According to MoF officials, the Ministry of Finance (MoF) would adjust the current national budget expenditure, reducing allocations by 2.61 percent to Tk 6.60 trillion from Tk 6.78 trillion. 

Ways and Means Advance (WMA) and Overdraft Ceilings will be increased by the government by 33.33 percent to Tk 80 billion each, according to sources at Bangladesh Bank (BB).  This will enable the government to access Tk 160 billion in daily banking system borrowings as needed.  This occurs at a time when public borrowing is increasing, and the objective for credit growth for the public sector has been raised from 36% to 37.7% in the most recent monetary policy for the period of January to June 2023.