DHAKA, June 8: Bangladesh’s Finance and Planning Minister M. Saifur Rahman on Thursday proposed a Tk697.400 billion national budget in net terms for the 2006-2007 financial year.

The proposed new outlay, also known as annual public expenditure, is 8.3 per cent higher than the outgoing original budget of Tk643.830 billion, which was later shrunk to Tk610.580 billion.

To the total expenditure, domestic revenue earnings will contribute to Tk525.420 billion, up by 17.1 per cent from the original and 14.9 per cent from the revised budget of the current fiscal year. Foreign grants represent Tk25,080 million of the expenditure or 1.3 per cent higher than the revised but 24.1 per cent lower than the initial amount of the outgoing budget.

Of the remaining Tk146.900 billion unaccounted for, known as budget deficit, is 7.1 per cent more than the Tk137.140 billion revised deficit and 4.3 per cent less than the original Tk153.560 billion deficit of the outgoing budget.

However, Mr Rehman proposed to keep the budget deficit limited to 3.2 per cent of gross domestic product (GDP). He actually has lowered his expectation of foreign assistance, as both the World Bank and the International Monetary Fund have made it clear that they would disburse neither development support credit nor PRGF tranche unless domestic oil prices are adjusted with the global ones.

The finance minister has proposed to collect Tk58.560 billion through foreign borrowing in net terms, down from Tk70.150 billion expected in the original budget of current year.

Domestic borrowings, a source of deficit financing, will bankroll Tk88.340 billion, while Tk58.560 billion is expected from external sources for the next fiscal year.

Of the domestic sources, net bank borrowing will make up Tk54.340 billion, while the non-bank borrowing Tk34.000 billion.