Bangladesh's fiscal year 2008-09 (July-June) budget will propose revenue income and spending worth about a trillion taka ($14.6 billion), a top finance official said on Sunday. The new budget to be announced on Monday will mainly focus on cutting poverty and boosting agriculture and the local manufacturing sector, said Mirza Azizul Islam, adviser (minister) to the country's army-backed interim government.
The size of the current year's budget is 871.37 billion taka, including the 75.23 billion taka liabilities of state-run Bangladesh Petroleum Corporation. Azizul said the new budget would aim to achieve 6.5 percent growth in gross domestic product (GDP) against an expected 6.2 percent at the end of the current fiscal year to June 30.
Inflation, hovering around 10 percent through the 2007-08 financial year, is expected to ease to 9 percent in the coming year, when the government grants higher subsidies to raise farm production, the adviser told Reuters in an interview.
The budget will allocate funds to projects aimed at halving the country's poverty by 2015, a goal that has often been slowed by frequent natural calamities that Bangladesh suffers.
Nearly half of the South Asian country's more than 140 million people are poor, living on less than $1 a day, official figures show. Economists and independent think tanks estimated 1.5 million people fell below the poverty line following last year's floods and a devastating cyclone that killed around 4,500 Bangladeshis and destroyed 3 million tonnes of foodgrains, mainly rice.
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On Saturday, the interim government, headed by former central bank governor Fakhruddin Ahmed, approved a 256 billion taka Annual Development Programme (ADP), 57 percent of which would be funded through foreign assistance.
"Almost 80 percent of the ADP is dedicated for agriculture and related sectors, rural infrastructure, energy, communications and human resource development sectors which we consider as nerve lines of our nation," Azizul said.
The new budget will more than double subsidies for fertiliser, food and oil to ease pressure on households, he said.
"The fiscal deficit will be nearly 5 percent of the GDP," he said.
"The core challenges for the economy is to maintain tolerable inflation, ensure food security, create more jobs and boost the private sector to invest in the manufacturing sector." To ease inflation, taxes and import duties will be withdrawn on food grains, Azizul said, adding that "we will increase supply of food grains."
Officials said the budget will have a domestic borrowing target of 169 billion taka to meet oil import needs. The revenue earning target by the National Board of Revenue will be 545 billion taka, up from the current fiscal year's 459 billion taka, they said.
"The budget will have a massive safety net programme for the poor to absorb the shock triggered by skyrocketing food prices," Azizul said. The government will spend 140 billion taka to subsidise fuel, fertiliser, food and social safety-net programmes. Expenditure on salaries and wages of government employees will be raised about 41 percent to 190 billion taka in the next fiscal year, officials said.
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