The government is facing challenges in foreign transactions due to a significant increase in the dollar price over the last few months.

Consequently, the government now has to allocate more funds to purchase dollars than previously anticipated.

The budget allocated for the payment of foreign debts and interests in the current fiscal year falls short, requiring an additional Tk4,042 crore to cover payments for foreign loans, interests, and subscriptions to various international organisations.

Recently, Economic Relations Department (ERD) Secretary Md Shahriar Kader Siddiky presided over a meeting of the Budget Management Committee to discuss the revised budget estimate for fiscal 2023-24.

ERD sources said, at the meeting, Tk48,062.66 crore for operating expenses and Tk48,062.66 crore for development expenses were proposed.

The proposed adjustments include an additional Tk4,039.51 crore in operating expenses and a reduction of Tk16.98 crore in development expenditures.

Furthermore, in the revised budget (fiscal year 2023-24), there is a proposal to reduce in secretariate portion Tk45.79 crore from the initially allocated Tk46.31 crore.

Analysing the Revised Annual Development Programme (RADP) of the Economic Relations Department (ERD), the Foreign Aid Budget and Accounts (FABA) and ICT Cell Divisions have sought an allocation of Tk26,296 crore for the foreign loan sector and Tk14,800 crore for the interest on the sector in the revised budget for the current FY 2023-24.

This proposal includes a total additional allocation of Tk4,019.98 crore, comprising Tk1,596 crore for the foreign loan sector and Tk2,423 crore for the interest.

In the present fiscal year, an allocation of Tk620.69 crore has been set aside for the payment of subscription and share capital.

 A total allocation of Tk642.11 crore, with an additional Tk21.41 crore factored in at the exchange rate of $1 equaling Tk115 owing to heightened demand for subscriptions from other organisations and fluctuations in the dollar exchange rate.

Among the nine economic offices located in ERD’s embassies abroad, the Economic Department in New York proposed an extra Tk35.77 lakh, in addition to the allocated Tk3.37 crore.

The other eight economic departments proposed a reduction of Tk30.98 crore, with a decrease of Tk1.73 crore from the overall allocated budget.

The current fiscal year’s budget for the four development projects incorporated in ERD’s ADP amounts to Tk65.61 crore.

This allocation comprises Tk5.23 crore in the RPA part, Tk42.79 crore in the DPA part, Tk 17.58 crore in the government part, and Tk1 lakh reserved for unauthorised projects.

However, in the revised budget, a total of Tk48.62 crore has been impacted, encompassing Tk5.87 crore in the RPA part, Tk32.80 crore in the DPA part, and Tk9.94 crore in the government part.

A senior official of the ERD told the Daily Sun the surge in the dollar rate has resulted in increased costs for foreign loans and interest payments.

While the ADP estimated the dollar rate at Tk104, the current rate stands at Tk115, he added.

Dr Zahid Hussain, the former lead economist of the World Bank's Dhaka office, expressed concerns to the Daily Sun, saying, “As the dollar rate increases, the amount of money will also increase… It’s normal. However, the dollar rate has been fixed at Tk115, which is much higher than the current government rate.”

Due to the increase in the dollar rate and inflation, a crisis has been created in the economy. Unnecessary or less important projects should be eliminated at this time. And important projects should be increased and completed quickly, he added.