In light of the current macroeconomic state, the government will adopt prudent measures in the national budget for fiscal 2024-25 to mitigate ongoing inflationary pressures and sustain economic growth, believes economist Prof Salim Uddin.

The forthcoming budget should neither be contractionary nor expansionary; it should be a balanced one, Prof Salim of Chittagong University told the Daily Sun in a preview of the FY25 budget.

Finance Minister Abul Hassan Mahmood Ali is slated to present a budget of around Tk8 trillion for FY25 before the national parliament on 6 June 2024.

Prof Salim said the budget size is expected to increase slightly from the current Tk7.61 trillion to Tk8 trillion in the coming fiscal year, with at least Tk5.5 trillion expected to come from the revenue sector. The budget would be balanced if the deficit does not exceed Tk2.45 trillion and budget growth is not above 5% year-on-year, he added.

Prof Salim, a fellow chartered accountant, is serving as the chairman of Bangladesh House Building Finance Corporation (BHFC) and Union Bank. He is also the president of the Institute of Cost and Management Accountants of Bangladesh (ICMAB).

The biggest challenge in the new fiscal year will be curbing inflation, the noted economist said, adding that the primary focus should be keeping price inflation within 7%. The chairman of the Bangladesh House Building Finance Corporation said that if GDP growth can be maintained between 6.5% and 7%, the total economy will see a growth of 13 to 14% in nominal terms.

This professor termed inflation the "diabetes of the economy," an enemy of the poor. He also expressed his hope that the upcoming budget would undertake all necessary measures to tame inflation.

“Despite many achievements, our tax-to-GDP ratio is still below the mark. No matter how hard the government tries, tax revenue is not increasing in proportion to GDP growth. The tax net should be expanded by adding new taxpayers. In this regard, the capacity of the NBR should be enhanced first,” Prof Salim stated.

Prime Minister Sheikh Hasina has recently given strict instructions to cabinet members to strengthen market monitoring to curb inflation. The premier also directed efforts to strengthen the tax structure to increase revenue earnings.

This economist mentioned that Bangladesh’s economic landscape will change significantly when all 100 economic zones are implemented. Prof Salim believes there will not be much change in the VAT and tax structures in the upcoming budget due to fiscal prudence.

“The supply of essential commodities should be given proper importance. Prudent monetary policy and fiscal policy, I believe, will resolve all our problems within the next two years,” he said.

The FY25 budget will serve as a tool for bringing back macroeconomic stability, according to this noted economist. He said the country is moving forward to achieve upper middle-income country status by 2031 and developed country status by 2041.

“Apart from government policies, we have the Awami League’s election manifesto, where strategies have been outlined to ensure the right to housing, health, and education, as well as plans to improve the living standards of poor people,” he stated.

Fellow Chartered Accountant Prof Salim lauded the role of Prime Minister Sheikh Hasina in protecting marginalised people from the impact of inflation and expected that a contractionary monetary supply policy would be prioritised in the new budget.

He also believes the public-oriented AL government will focus on social security in the first post-election budget. When people have money, they become self-reliant, he said.

This economist advised implementing the development budget through monthly planning to ensure the transparency of an inclusive budget. “We have been seeing a pattern in the implementation of ADP. Usually, pressure increases in the last three months of a financial year due to less implementation in the first nine months,” he stated.