Bangladesh unveiled a USD 28 billion budget today, with a series of populist tax and spending measures designed to woo voters before general elections due this year.
The 2.225-trillion-taka plan for the year beginning on July 1 forecasts a 17.5 per cent rise in spending, with a range of infrastructure developments earmarked.
Finance Minister A M A Muhith forecast 7.2 per cent growth for the 2013-2014 financial year, even though there are signs the economy is slowing down sharply amid political violence and slower than expected growth in the garment sector.
Muhith announced the budget in parliament, the last by his ruling Awami League party before the country goes to the polls.
"We have refixed the real economic growth target at 7.2 per cent for the financial year 2013-14," the finance minister said.
The budget includes USD 8.3 billion in development spending including new bridges, roads, and power plants, aimed at boosting growth to over 7.0 per cent.
Muhith also unveiled populist measures including a permanent commission charged with raising the salaries of the million-strong public service, as well as raising the minimum tax-free income threshold and expanding welfare spending for the poor.
Muhith said an expected rise of more than 20 per cent in tax receipts would keep the budget deficit at 4.6 per cent of GDP. The shortfall will be financed by domestic borrowing and loans from rich nations and development lenders such as the World Bank.
The government targeted the same growth in the outgoing fiscal year. But the economy grew only 6.03 per cent, the slowest in four years, amid a stagnating farm sector and slower garment exports.
