Next budget won't be contractionary: Finance Minister

The next budget will be on the expansionary mode as in the current fiscal year to maintain vibrancy in the economy through measures to boost spending and earn more revenue, Finance Minister AHM Mustafa Kamal has hinted.

"We were under pressure for a contractionary budget last year. But we did not choose that path. And we are now getting dividends," he said at a pre-budget discussion with the news media editors on Tuesday as part of his parleys with professionals before finalising the budget for the fiscal 2023-24.

"Here, you all are calling for duty cuts only, but we need to see how to earn more to spend more. We need a balanced distribution of resources," the finance minister said, posing a question how an economy will grow if it remains in contractionary territory.

The finance minister's broad hint of what the next budget would look like marks a possible departure from the belt-tightening measures like restricting imports to save dollars and slowing low-priority development projects.

Annual development outlay for the current fiscal year has been slashed by 7.87% as revenue growth has slowed and foreign finance inflow has been lower-than-expected.

The government has so far borrowed much less from banks than what is projected in the budget for the current fiscal year, though demands for subsidies for agriculture and energy well exceeded the budgetary allocation.

Giving his views on the next budget, The Financial Express Editor Shamsul Huq Zahid asked how the additional pressures of subsidy would be addressed in the budget. He suggested that the next budget should be pragmatic given the overall domestic scenario and global uncertainties over the Russia-Ukraine war.

Since crude oil price marked a significant decline, from over $110 to $72 per barrel, in the global market, domestic price of fuel oil should be lowered which would have a positive impact on local market prices, he suggested.

Two other editors – Nayeemul Islam Khan and Naem Nizam – expressed their concerns over the overall banking sector and called for immediate steps to prevent bad borrowers from fleeing the country with bank money.

The print media editors said soaring prices of newsprint – both locally manufactured and imported – significantly increased the cost of newspaper publication, while the allocation for government's advertisement has not increased and arrears of advertisement bills of government offices rose to over Tk100 crore.

"Newspaper is a service industry, but corporate tax here is higher than that of the garment industry," Bangladesh Pratidin Editor Naem Nizam said. He called for more tax measures on social media platforms like Google and Youtube which, he said, are diverting ad revenues from the electronic media.

Nayeemul Islam Khan, emeritus editor of Daily Amader Notun Shomoy, asked why the price of local newsprint shot up 300% compared with 50% rise in imported newsprint.

Shykh Seraj, a director at Channel i television, said farm sub-sectors like poultry, fishery, dairy and livestock need budgetary support for feeds, whose unusual price hike pushed prices of egg, meat, fish and milk. "Broiler chicken shot up nearly Tk300 per kg today from Tk80," he said. He suggested that these sub-sectors should be brought under insurance coverage with premium support from the government to protect farmers from sudden loss and keep supply of animal protein sources smooth.

Seraj pointed out that though the central bank offers agriculture loans at low interest, farmers are not being benefited as the loans are disbursed through NGOs who charge higher interest rates.

Responding to the observation, Bangladesh Bank Governor Abdur Rouf Talukder admitted that the 7% interest on farm loan becomes 20-28% when disbursed by a third party. From 1 July of the next fiscal year, banks will not be allowed to engage a third party to disburse farm loans. They have to lend money directly to farmers, or we'll take back the money and give it to other able banks," he said.

Fatima Yasmin, senior secretary at the Finance Division of the Ministry of Finance, moderated the virtual discussion also attended by a number of journalists and senior financial bureaucrats.