The overall budget deficit for FY 2014-15 is estimated at Tk.67552 crore that represents 5 percent of GDP. The revised deficit in FY 2013-14 was Tk. 59551 crore (5 percent of GDP), which was Tk. 55,032 crore (4.6 percent of GDP) in the proposed budget. Since the revenue collection target of the government seems to be ambitious, the government may be forced to cut the expenditure level in FY 2014-15 to keep the budget deficit within the target. The three fiscal targets related to revenue earning, revenue expenditure and budget deficit thus has fallen short and the government had to revise these by a significant margin. Even then, the targets for revenue collection and revenue expenditure in FY 2013- 14 are set above the trend observed in the last several fiscal years. In addition, the NBR has missed the target to collect Tk. 130178 crore in FY 2013-14. The gap between the total expenditure and total revenue is increasing over the years. Due to the slower rate of collection of revenue as compared to the total expenditure, more borrowing and foreign loans are required to finance the budget deficit.

Per capita deficit has been increasing over time. As in FY 2014-15, the government has proposed the biggest budget ever, the deficit is the biggest and so is the per capita deficit. In FY 2013-14, the per capita deficit was Tk.3533.22 where the per capita GDP was Tk.86731. Per capita GDP were Tk. 61198, Tk 69914 and Tk.78089 in FY 2010-11, FY 2011-12 and FY 2012-13 respectively whereas the per capita deficit were Tk.2626.79, Tk.2981.79 and Tk.3387.64 respectively in the same period. The rate of growth in per capita deficit was 13 percent, 13.51 percent, 13.61percent, and 4.27 percent in FY 2010-11, FY 2011-12, FY 2012-13 and FY 2013-14 respectively. On the other hand, the rate of growth in per capita GDP was 13.41 percent in FY 2010-11 which increased to 13.75 and 12.03 percent in FY 2011-12 and FY 2012-13; then slightly decreased to 11.18 percent in 2013-14. The per capita GDP is increasing and per capita deficit is keeping pace with it.

The gap between the revenue and the expenditure is mostly financed through the borrowing. Against the deficit of Tk. 67552 crore in budget for FY 2014-15, the targeted borrowing is Tk. 61346 crore. In FY 2013-14, the target of borrowing was Tk. 48362 crore where the revised debt was Tk. 53595 crore. The amount of debt was Tk. 39005 crore, Tk. 41868 crore and Tk. 33218 crore in FY 2012-13, FY 2011- 12 and FY 2010-11 respectively. In the last five years from FY 2010-11 to FY 2014-15, the borrowing has increased by 103.35 percent. Total budget financing of the government in July’15 stood higher at Tk.9101 crore (an increase of 77.18 percent) than Tk.5137 crore during the same period of the previous fiscal year. An obligation or liability to pay later arising from the government borrowing in each year or budget financing is known as debt (Pearce, 1992).

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