Jun 09, 2022 7:45:03 p.m.
The government allocated 827.45 billion taka in fuel and fertilizer subsidies, which represents 1.9% of GDP in the budget for the fiscal year 2022-23.
The allocation is 199.2 billion taka, which is 23.82% more than the revised budget for the current financial year.
However, considering the trend of oil, gas and fertilizer prices in the international market, the expenditure on subsidies or incentives could be 15-20% higher than expected due to the increase in raw material prices. first in the world, Finance Minister AHM Mustafa Kamal said in his presentation of the budget for the next fiscal year on Thursday.
This could pose a challenge in managing the budget for the next fiscal year, he added, bdnews24.com reports.
In the budget for the financial year 2021-2022, the allocation for subsidies and incentive expenditure was 538.52 billion taka.
“Due to rising fuel and fertilizer prices in the international market, the government had to increase expenditure on subsidies/incentives for fuel, electricity, gas and fertilizers. Thus, estimates of expenditure on subsidies and incentives on the revised budget for the financial year 2021-2022 had to be increased to Tk. 66,825 crores (1.70% of GDP),” Kamal said in his budget speech.
Grant management is under pressure due to current circumstances.
Kamal pointed out that “rising prices in the international market and controlling imported inflation in the local market from rising world prices” are major challenges for Bangladesh.
“It should be noted that importing the same volume of nine essential products for Bangladesh (crude oil and refined oil, LNG, wheat, fertilizer, palm oil, coal, soybean oil, corn and rice) would cost 8.2 billions of additional dollars. in 2022 compared to 2021 due to higher prices,” he said.
“In addition to raw material prices, industrial raw material prices, prices of other consumer goods and the cost of international transportation are also increasing. Therefore, there is imported inflation pressure in the local market.