FY’20-21 sees budget cut to Tk 5.02tn

Hasibul Aman

29 May, 2020 12:00 AM printer

The national budget for the current fiscal year is likely to be trimmed by a sizeable portion at the fag end in the wake of stalled economic activities due to coronavirus.

The ministry of finance is going to curtail the budget size by Tk216.14 billion or 4.13 percent to Tk5015.77 billion from the originally proposed Tk5,23,1.91 billion, sources said.

The move comes as both revenue earning and public spending were hampered severely because of two months countrywide shutdown that the government imposed to contain the spread of coronavirus. 

Economic analysts, however, think that the actual budget execution rate will be much lower as economic activities nearly came to a standstill.

Even Finance Minister AHM Mustafa Kamal has also expressed skepticism regarding budget execution, especially in revenue mobilisation, citing low export and import amid the pandemic.  

He also mentioned that revenue collection will remain low at the yearend, while export-oriented industry, SMEs, cottage industries and other productive sectors have been affected seriously with the lockdown.

Besides, the government development expenditure plan won’t be achieved this fiscal year as work of most large infrastructure projects got stopped during the lockdown.

“Even though the budget is being curtailed by over Tk210 billion, the real execution after June will be lower than the revised budget,” commented former adviser to the caretaker government AB Mirza Aziz.

The budget deficit is likely to shoot up because revenue earning fell much short of the target while the government is spending more on fighting COVID-19, he also observed.  

He also suggested not taking loans from the banking sector to cover the deficit as the government has already crossed the limit.

The National Board of Revenue (NBR) had set an ambitious revenue target at Tk3,778.11 billion riding on new VAT law. But the hope has shattered with the pandemic. Now, the target has been shortened to Tk3,575.14 billion.

The target of getting foreign grants has also been brought down to Tk34.54 billion from originally set Tk41.68 billion.

The government had planned big to spend Tk2.27 trillion on development expenditure, but ADP has been curtailed to Tk1.93 trillion following slow development work.

The budget deficit target set at the outset of FY’20 has been changed slightly to Tk1406.09 billion which was Tk1,41,211 billion in the original budget.

The government’s bank borrowing target saw a steep rise to Tk729.76 billion which was originally set at Tk473.64 billion.  There was a plan to borrow Tk753.90 billion from foreign sources, but it has been brought down by Tk117.31 billion to Tk63,659 billion in the revised budget.

The government planned to borrow Tk270 billion from savings certificate sales in 2019-20 fiscal year, but the target has been lowered to Tk119.24 billion because of slow response from buyers.


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