DHAKA: Bangladesh will announce Thursday a $22 billion budget for the 2011-2012 financial year that will target seven percent growth for the economy, officials said Thursday.
Officials said the 1.63 trillion taka budget for the next fiscal year, which starts on July 1, will aim to boost growth on the back of major investments in power and infrastructure -- areas long seen as drags on the economy.
The South Asian country's economy grew 6.66 percent in the last financial year, according to official figures, driven by a 42 percent expansion in export earnings and gains in the agricultural sector owing to favourable weather.
Development spending for 2012 will be hiked 28 percent, officials said, taking it to a record $6.4 billion, with $1.2 billion earmarked for the power sector and $1.1 billion for improving transport infrastructure.
Some experts have warned, however, that seven percent growth will be difficult to attain given the country's shaky economic situation.
Inflation has soared to a 31-month high of 10.67 percent and foreign currency reserves are drying up fast as import costs and the fuel subsidies bill soars.
"For the first time in many years our macroeconomic situation is under huge strain," former International Monetary Fund senior official Ahsan H. Mansur told AFP.
"The country has come to a point where it can no longer afford this ever-expanding subsidy bill, which could hit $4 billion in the new fiscal year. The days of a free lunch should be over," he said.
In a confidential April report, a copy of which was obtained by AFP, the IMF warned Bangladesh was "highly vulnerable to external shocks" and said using foreign currency reserves to cover fuel import costs was unsustainable.
Copyright AFP (Agence France-Presse), 2011
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