A Detailed Analysis of Bangladesh’s Budget for 2023-24

On Thursday, Bangladesh Finance Minister AHM Mustafa Kamal presented a historic 7.62-trillion-taka (71-billion-U.S. dollar) national budget for the fiscal year 2023-24, which will start in July. The budget aims to achieve economic growth of 7.5 percent and to realize the vision of prime minister Sheikh Hasina to build a smart Bangladesh and recover from the crisis caused by the Covid-19 pandemic.

Key Features of the Budget 2023-2024

• The total budget size is equivalent to 17.9 percent of the gross domestic product (GDP).
• The revenue target is fixed at 4.03 trillion takas (47.4 billion U.S. dollars), out of which 3.3 trillion taka (38.8 billion U.S. dollars) will come from the National Board of Revenue (NBR).
• The budget deficit is estimated at 6.2 percent of GDP, which will be financed by both domestic and external sources.
• The allocation for the health sector is raised by 3.2 percent to 327.6 billion taka (3.8 billion U.S. dollars), which is about 5 percent of the total budget.
• The allocation for the education sector is raised by 8.2 percent to 881.6 billion taka (10.4 billion U.S. dollars), which is about 11.6 percent of the total budget.
• The allocation for social safety net programs is raised by 13.4 percent to 1.07 trillion taka (12.6 billion U.S. dollars), which is about 14 percent of the total budget.
• The allocation for the annual development program (ADP) is raised by 14 percent to 2.25 trillion taka (26.5 billion U.S. dollars), which is about 29.5 percent of the total budget.
• The government plans to spend 1.02 trillion taka (12 billion U.S. dollars) on interest payments, which is about 13.4 percent of the total budget.

Major Sectors and Priorities in new budget 2023

The budget focuses on four major sectors: agriculture, industry, service and human resource development. The priorities of the budget are:

• To ensure food security and increase agricultural productivity.
• To promote the digital economy and cashless society.
• To enhance export competitiveness and diversify the export basket.
• To expand social protection and welfare programs.
• To improve health care and education quality.
• To develop infrastructure and energy sector.
• To protect the environment and combat climate change.

Tax Measures and Incentives in bajet 2023

The budget proposes some tax measures and incentives to boost revenue collection and stimulate economic activities. Some of them are:

• To reduce corporate tax rate by 2.5 percentage points for all sectors except banks, insurance and financial institutions.
• To increase import duty on software from 5 percent to 25 percent to encourage local software development.
• To withdraw supplementary duty and regulatory duty on 425 imported items to facilitate Bangladesh’s graduation from a least developed country (LDC) to a developing one by 2026.
• To increase excise duty on bank deposits above 500,000 taka (5,882 U.S. dollars) from 800 taka (9.4 U.S. dollars) to 1,000 taka (11.8 U.S. dollars) per year.
• To increase customs duty on gold bars and gold pieces from 1,500 taka (17.6 U.S. dollars) per bhori (11.664 grams) to 3,000 taka (35.3 U.S. dollars) per bhori.
• To reduce customs duty on mobile handsets from 25 percent to 10 percent to make them affordable for low-income people.

Challenges and Risks

The budget faces some challenges and risks in achieving its targets and objectives. Some of them are:

• The uncertainty and impact of the Covid-19 pandemic on the economy and public health.
• The low revenue collection and high expenditure pressure due to the pandemic.
• The rising public debt and interest payments.
• The implementation capacity and efficiency of the government agencies.
• The external shocks and vulnerabilities such as global trade tensions, commodity price fluctuations and climate change.

Conclusion

The budget for 2023-24 fiscal year is an ambitious and expansionary one that aims to build a smart Bangladesh and overcome the challenges posed by the Covid-19 pandemic. The budget focuses on four major sectors and prioritizes digital economy, export diversification, social protection, health care, education, infrastructure and environment.

The budget proposes some tax measures and incentives to boost revenue collection and stimulate economic activities. However, the budget also faces some challenges and risks in achieving its targets and objectives, such as the uncertainty and impact of the pandemic, the low revenue collection and high expenditure pressure, the rising public debt and interest payments, the implementation capacity and efficiency of the government agencies, and the external shocks and vulnerabilities.