The government plans to boost exports by promoting major industries and sending a record number of migrant workers abroad to boost foreign currency reserves.
“There will be a surprise in the next budget in terms of supporting big industries,” Finance Minister AHM Mustafa Kamal said.
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In addition, additional funds will be set aside for poor and low-income people reeling from the rising cost of living amid high inflation.
The minister shared his thoughts with The Daily Star on Monday as he prepares to place his fourth budget in the Jatiya Sangsad tomorrow.
“We will support large industries that can manufacture and sell products in other countries…
“We will promote ‘made in Bangladesh’ products and facilitate the manufacture of products elsewhere [by Bangladeshi large industries] to meet global demand. We will produce cars for export,” he noted.
The Minister, however, did not specify the support to be granted to large industries.
Seeking anonymity, a finance ministry official said the aid could include both tax relief and political support.
The size of the next budget could be Tk 678,064 crore.
The revenue generation target could be Tk 433,000 crore and the National Revenue Board could be tasked to collect Tk 370,000 crore.
The budget deficit could amount to Tk 245,064 crore or 5.5% of gross domestic product, meaning it will be higher than the 5% ceiling that Bangladesh had always maintained until the Covid pandemic forces the government to increase spending despite lower than expected revenue generation. .
The budget comes at a time when Bangladesh, like other economies, faces the twin challenges of rising consumer prices and pressure on foreign exchange reserves.
The Russian-Ukrainian war has intensified volatility and threatens to derail the trajectory of recovery.
But Kamal hopes to keep the country crisis-free, and his confidence stems from the outward movement of migrant workers as global economies reopen.
“We will send the largest number of migrant workers overseas in this fiscal year.”
Nearly eight lakh migrant workers went abroad in the first 10 months of the current fiscal year, far exceeding the number a year ago. And Kamal expects the figure to reach 10 lakh before the end of this fiscal year on June 30.
“Western economies will need additional workers once the war in Ukraine is over. We will set a labor export target of 15 lakh in the next fiscal year,” he said.
Another comfort for Bangladesh comes from the fact that the items for the country’s export are mainly consumed by the low and middle income groups in the destination countries.
“We don’t produce many high-value items. Our exports won’t be affected,” Kamal said, adding that the country’s export earnings would reach $50 billion this fiscal year.
Due to higher import bills, subdued exports and a slower inflow of funds, Bangladesh’s foreign currency reserves have recently taken a hit.
Kamal, however, said: “The reserves are still at a comfortable level. And we will soon increase them to $50 billion.”
As prices of basic necessities are expected to remain at higher levels in the coming months, the government has moved to support one million families hard hit by runaway inflation that hit an 18-month high in April.
“We are launching safety net projects. Beneficiaries will not have to come to us to ask for help. Instead, we will take action so that they can get help from the comfort of their homes,” said said Kamal, referring to money transfers via mobile financial services.
The finance ministry official said the total allocation for the safety net programs could be 113,000 crore taka or 2.5% of GDP. The bill on the universal pension scheme should also be tabled in the budget session.
The official further said that in the next financial year, the government may offer the possibility of recovering the money generated in Bangladesh but laundered abroad.
Under the facility which will be offered for the first time, those who have transferred money overseas through commercial under-invoicing could be given the opportunity to recover it by paying a 7% fee to as a penalty, the official said.
“This scope will only be available for the next fiscal year.”