DHAKA, June 7 (Reuters) - Bangladesh will increase spending nearly 19 percent to 1.9 trillion taka ($24 billion) in its budget for the coming year, the finance minister said on Thursday, as it aims to ramp up economic growth to 7.2 percent.
The government also aims to cap its deficit at 5 percent of gross domestic product in the fiscal year 2012/13 starting in July, down from a revised 5.1 pct of GDP in 2011/12, Abul Maal Abdul Muhith told parliament while presenting the budget.
To help offset the spending increase, Dhaka is targeting a 22 percent rise in tax revenue to 1.4 trillion taka, largely due to improvements in tax collection and crackdowns on evasion.
The Bureau of Statistics has revised the country’s economic growth target for the outgoing fiscal year to 6.3 percent, backtracking on the government’s earlier projection of 7 percent.
Analysts said that the penultimate budget for Prime Minister Sheikh Hasina’s government would be challenging under the shadow of a prolonged global downturn, slowing investment, high inflation and a ballooning subsidy bill.
The budget will ramp up social spending by providing subsidised grain to more of the country’s poor and creating more jobs, promising some relief to those hit hardest by high inflation, but sparking worries about its huge cost.
The 7.2 percent growth target, if attained, would be the highest for the impoverished South Asian country since 1973-74, when the economy grew 9.59 percent. (Reporting by Ruma Paul; Editing by Anis Ahmed)