May 20, 2013 | 09:01 AM (BD Time)
20 May, 2013 Monday
Bloated, deficit and risky budget
IF an overview is made of the national budget for 2012-13 that was presented in the Jatiya Sangshad by the Finance Minister on Thursday, then the main striking characteristic of it would be seen as the unmet gap between revenue earnings and its spending. The budget proposes a total outlay of 192,000 crore Taka out of which 52,000 crore Taka or more than one third of the total budgeted amount would remain as deficit. So, nothing has changed from last year and the trend of presenting a budget with a yawning deficit continues in the same fashion.
A very big amount from the proposed budget will be financed not from the government's revenue resources coming from more taxes paid out by eligible persons or enterprises as the economy grows significantly but through the easy and facile method of borrowing. For the last two years, government has been resorting to this easy way out of borrowing from the country's financial system. This year this trend will be even more pronounced. But the temptation for the easy way out also involves adverse consequences. How far the banks which are already facing liquidity crisis will be able to supply more money without going bust, poses a big question.
If it is accepted that the private sector is the real driver of the economy, then this cannot be good news. There is every likelihood that government will be tempted more in the next fiscal year to print money to meet its projected expenditure for funds in a situation where it may not be able to raise enough from borrowings. If this happens, then it would become well nigh impossible to maintain even a semblance of control over inflationary spirals or to retain macro economic stability or the save taka's value from falling even more and dangerously.
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