Based on the revenue and expenditure analysis, analysts expect a fiscal deficit (excluding grants) of c.4% of GDP for FY15 for bangladesh, versus the government’s target of 5%. The fiscal deficit could surprise positively even with the substantial shortfall in revenue collection expected in Q4 – FY15 owing to the political turmoil in H2 – FY15.
A key reason for the potential positive surprise could be fiscal consolidation due to reduction in non -development spending rather than cuts to ADP spending.
Overall FY15 ADP spending is likely to increase by c.15% y/y, according to Standard Chartered. This may indicate more a better quality of fiscal consolidation, as cuts to development spending (rather than non – development spending) tend to have a negative fiscal multiplier effect.
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