State Minister for Information and Broadcasting Mohammad Ali Arafat today said the government has proposed a contractionary budget for the fiscal 2024-25 to ease public suffering by curbing inflation.

“The proposed budget has attached highest priority to containing inflation. The government’s all out efforts to bring the inflation under control within the next fiscal to lessen the public suffering has been manifested in this budget,” he said.

The state minister said this taking part in the general discussion on the proposed budget for the FY 2024-25 in the House with Speaker Dr Shirin Sharmin Chaudhury in the chair.

“The inflation reached an extreme level across the world following the global reality created by Ukraine-Russia war that hiked the prices of fuel and other products after the global pandemic of Covid-19. Bangladesh is not out of that purview,” Arafat said.

Noting that the government proposed a contractionery budget this year targeting to curb inflation, he said, “We previously witnessed that the government under the leadership of Prime Minister Sheikh Hasina usually increases the budget size by 13 to 14 percent every year, but only 6 percent increase was made this year to encourage savings and reduce investment to control the inflation”.

Terming the proposed budget a people friendly one, the state minister said, “Even in this contractionary budget, we saw that the allocations for social safety net programmes and education have been increased while all kinds of arrangements have been ensured in the budget to lessen the sufferings of the lower income people”.

This budget proposed to impose high tax on the higher income people and reduce the tax for lower income people according to their income ratio, he said, adding, it proved that this budget has a target to help the lower income people maintain a normal living standard.

Referring to the global economic recession and its impact, Arafat said the Bangladesh government had to pay additional US$14.5 billion in 2021, 2022 and 2023 only to buy fuel compared normal time.

“That means if the world did not experience the Covid-19 pandemic and Ukraine-Russia war and the price of fuel remained stable, this US$14.5 billion certainly would have remained in Bangladesh Bank’s reserve, which would have saved us from different crisis,” he continued.

Highlighting the country’s economic progress attained during the Awami League (AL) government in the last 15 years, the state minister said the government has been able to bear this extra expenditure and stand strong still amid the global crisis due to the constant trend of development and the strong economic backbone achieved before the Covid-19.

Referring to opposition parties’ criticism over the government’s borrowing, claiming that the government is carrying out mega projects with loans, he said this year, Taka 2.56 lakh crore has been proposed as deficit budget that would come from foreign and domestic sources as loans, which is 4.6 percent of GDP.

“If the deficit budget remains under 5 percent, it is a global standard. Even, the USA is borrowing over 6 percent of their GDP,” Arafat said, adding if the government refrains from borrowing, the country and its people would be deprived of development and its benefits.

“Borrowing trend exists worldwide, but it should be kept at a tolerable level,” he added.

World Bank and International Monetary Fund (IMF) have set a threshold, saying if debt to GDP ratio of any country accedes 77 percent, it will fall in risk; but less than this threshold is a tolerable level, the state minister said.

“But Bangladesh’s current debt to GDP ratio is 36 percent, which is in the best position among the South Asian nations and in a better position than many developed countries,” Arafat said.

-BSS.