Shawdesh desk:

The latest depreciation of the local currency by Tk 7 against the US dollar will push up the foreign loan payment from the initial projection in the new national budget for FY25.

Besides, conditions by the International Monetary Fund will limit the government’s borrowing scopes to meet the budget deficit amid little sign of improvement in the forex reserves at least in the next six months.

The Finance Division highlighted the pressing issues in a meeting with prime minister Sheikh Hasina at her office at Tejgaon while presenting the provisional outlay of the new budget.

Officials attending the meeting said that the budget would be a conservative one to supplement the contractionary monetary policy being implemented by the Bangladesh Bank reflecting the IMF recommendations.

On Thursday, the BB introduced the crawling peg system that resulted in a price hike of dollar by Tk 7, apparently to ensure the release of the third tranche worth around $1.15 billion from the IMF by this or the  next month.

Finance Division officials said that the devaluation of Taka by around 26 per cent alone in FY23 increased the repayment of interest against the foreign loan to Tk 20,500 crore from an initial projection of around Tk 15,000 crore..

The latest depreciation  of local currency will force the Economic Relations Division to calculate the extra allocation for the interest repayment against foreign loan in the new budget, said the officials.

The prime minister gave a patient hearing to their presentation while emphasising the continuation of the social safety net programme as well as payment of subsidy to the agricultural sector.

Finance minister Abul Hassan Mahmood Ali and state minister for finance Waseqa Ayesha Khan attended the meeting.

The finance minister is likely to announce the new national budget on June 6 in the parliament with an overall expenditure outlay of Tk 7,97,000 crore, only 4.6 per cent higher than the original outlay of Tk 7,61,785 crore in the outgoing FY24.

The annual development programme in FY25 is likely to be fixed at Tk 2,65,000 crore, compared with the original Tk 2,63,000 crore in the outgoing FY24 .

The growth in the gross domestic product is likely to be fixed at 6.75 per cent while the inflation at 6.5 per cent.

On May 8, an IMF mission projected inflation at 7.2 per cent and the GDP growth at 6.6 per cent in FY25, while concluding a fortnight-long visit in the capital.

The IMF also asked the government to keep the budget deficit at 4.6 per cent of the gross domestic product from the 5.2 per cent in the outgoing FY24.

Besides, the IMF wanted the National Board of Revenue to earn extra 0.5 per cent of the GDP each year during the programme period to be expired in May 2026.

The NBR is likely to apprise the PM of new tax measures in a meeting today.