The Awami League government's initial GDP growth target of 6.8 per cent for the 2024–25 fiscal year has been revised down to 5.25 per cent by the interim administration now managing the country's affairs.
This decision was taken during a virtual meeting of the Monetary and Exchange Rate Coordination Council Committee, chaired by Finance Advisor Dr Salehuddin Ahmed on Monday (2 December). Sources within the Ministry of Finance disclosed the developments.
The meeting was attended by high-profile officials, including Planning Adviser Professor Wahiduddin Mahmud, Commerce Adviser Sheikh Bashir Uddin, Bangladesh Bank Governor Ahsan H Mansur, and other senior government figures. However, Dr Salehuddin Ahmed declined to comment on the meeting's outcomes when approached by journalists.
Inflation and budgetary adjustments
The meeting also revised the inflation target. Originally set at 6.5 per cent for the fiscal year, the new goal aims to keep inflation below 9 per cent, down from October's alarming rate of 10.87 per cent.
In light of growing economic pressures, including natural disasters and costs arising from recent political unrest, the government plans to reduce its Tk 7.97 lakh crore budget by Tk 30,000 crore. Despite intentions to curb spending, obligations such as arrears on gas, electricity, and fertiliser subsidies totalling Tk 50,000 crore limit the extent of cuts.
Borrowing strategies
Unlike the previous government's reliance on bank loans, the interim administration is prioritising borrowing through savings certificates. However, meeting IMF requirements to reduce savings certificate debt by one-fourth by 2026 poses a challenge. With net sales of savings certificates already negative, strategies to boost sales will need careful planning.
Revenue and economic performance
While remittance inflows and export earnings show promise, revenue collection remains a concern. The National Board of Revenue (NBR) reported a shortfall of Tk 30,767 crore against the first four months' target, with Tk 1,134.44 crore collected. The committee urged stronger VAT collection measures and steps to prevent tax evasion, while also highlighting the need to increase non-tax revenue.
On a positive note, foreign exchange reserves have shown slight improvement, and the exchange rate remains stable. The government anticipates $4 billion in budgetary support from the IMF, World Bank, ADB, and other agencies by June 2025.
Looking ahead
The meeting also discussed plans for the 2025–26 fiscal year budget, tentatively set at Tk 8.3 lakh crore. Growth projections for the next fiscal year exceed 6per cent, with inflation expected to fall to 6.5per cent, aided by contractionary monetary policies and declining international commodity prices.
The Finance Ministry expressed optimism that inflation, currently averaging 9per cent, will decrease to around 8 per cent on a point-to-point basis by June 2025. The revised fiscal strategy reflects the administration's efforts to balance economic stability and growth amid ongoing challenges.