Bangladesh's army-backed interim government on Thursday unveiled an 871.37 billion taka ($12.6 billion) annual budget for fiscal 2007/08, aiming to spur growth, cut inflation and reduce poverty. This compares with a revised budget of 668.36 billion taka for the 2006/07 fiscal year ending on June 30.
The original budget for that year was 697.40 billion taka. The new budget, effective from July 1 and announced by the government's finance adviser Mirza Azizul Islam in a national broadcast, also focused on boosting revenue, improving agriculture and power generation, and creating jobs.
It also aimed at faster economic growth for achieving UN-declared millennium development goals to halve the country's poverty by 2015. "57 percent of total budget, non-development and development combined, will be spent on programmes directly or indirectly relating to poverty reduction," Azizul said.
"This warrants further creation of employment opportunities, removal of infrastructural constraints, improvement of law and order, human resource development, further widening of social safety net and strengthening of financial management." He proposed 25 percent of the total budget for human resource development and 23 percent for the overall agriculture sector.
Among the economic challenges, Azizul mentioned "maintaining macroeconomic stability, accelerating economic growth, keeping inflation within tolerable limits (and) removing constraints to private-sector-led growth".
The government has already approved an Annual Development Program (ADP) of 265 billion taka for the next fiscal year, which will be 49 percent funded through foreign aid and the rest from internal resources.
The ADP for the 2006/07 financial year was cut to 216 billion taka from the originally proposed 260 billion taka, because of insufficient funding. Azizul said gross domestic product (GDP) growth was expected to accelerate to 7.0 percent in 2007/08 from a targeted 6.5 percent this year, and inflation to drop to 6.5 percent from 7 percent now.
Azizul envisaged revenue receipts of 573 billion taka, or 10.8 percent of GDP. The total revenue income target for 2006/07 was 525.42 billion taka, which was later revised to 494.72 billion taka. Azizul said the government did not add any new taxes in the coming budget but hoped to achieve the revenue target by improving collection management and efficiency.
The business community hailed the budget as it had tried to curb prices by reducing duties on a number of essentials. "The budget proposed to eliminate duties on a number of items including edible oil and lentils which will be a relief for the common man," Mir Nasir Hosain, president of Federation of Bangladesh Chambers of Commerce and Industry said.
The budget deficit is likely to be 4.2 percent of GDP, of which 2 percent will be financed from external sources and the rest with domestic sources. The government plans to import 800,000 tonnes of foodgrains in the coming year to meet the food deficit.
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