Budget deficit may exceed 5 percent of GDP in fiscal 2017-18, breaking out from years-long practice with the view to wooing the electorate ahead of the next national election.

It will most definitely be about 6 percent of GDP, said a finance ministry official.

The finance division is due to present the preliminary budget projection for the next year at a meeting today of the fiscal coordination council and resource committee.

There is no clause in the budget management act specifying an upper bound on the deficit.

But in the last several years the budget was diligently prepared such that the deficit stayed within 5 percent; but, in the course of the fiscal year the deficit would come to below 4 percent.

One of the reasons for the budget deficit to settle on the 5 percent of GDP mark was that the International Monetary Fund put it as a condition for the Extended Credit Facility programme.

The tenure of the IMF's ECF programme tenure ended at the beginning of last year, meaning there is no condition that the deficit be kept within 5 percent.

But Finance Minister AMA Muhith wants the next budget to cross the Tk 400,000 crore-mark. In that scenario, it would not be possible to contain the deficit within 5 percent.

If the deficit has to be kept within 5 percent, an abnormal revenue growth target has to be set, which would be unworkable.

“We tried to keep the revenue growth somewhat realistic and also to keep the deficit close to the earlier practice,” said the finance ministry official.

Muhith is giving more emphasis on the upcoming budget as he wants to accommodate all his plans. The budget will be completed before the next national election.

After a pre-budget meeting recently, the finance minister said: “At first I decided to keep the size within Tk 400,000 crore, but later I increased the size to implement my plans properly.”

The size of next fiscal year's budget may be Tk 400,200 crore -- the highest in the country's history and yet another milestone for the current Awami League government.

When the government assumed power in 2009, it set a record by setting a budget of Tk 110,524 crore in fiscal 2009-10 -- the highest then.

As per the medium-term budgetary framework, the size of the next budget should be about Tk 390,000 crore, so the Tk 400,200 crore-figure is not overly ambitious.

The size of the current year's budget is Tk 340,605 crore, but it is going to be downsized to less than Tk 310,000 crore in the revised budget, the official added.

The revenue collection target for next fiscal year may be more than Tk 282,000 crore, of which the National Board of Revenue will have to contribute Tk 236,000 crore.

The NBR's target this fiscal year is Tk 180,000 crore, which means the revenue authority would be working with a 24 percent higher clout.

In the first eight months of the fiscal year, the NBR's collection grew around 20 percent, which is still satisfactory when viewed in the historical context.

But as per the target set at the beginning of fiscal 2016-17, the growth should be 43.89 percent from the previous year's actual collection.

“Chasing a revenue growth target of more than 40 percent is absurd,” said a former NBR official.

When the budget was placed in June last year, many economists had said the revenue growth target would not be met as it was overly ambitious. The finance ministry official said they have been trying to keep the growth target for next fiscal year at a realistic level. The GDP growth target for fiscal 2017-18 may be set at 7.4 percent, up from current fiscal year's 7.2 percent.

Muhith on various occasions said the GDP growth this fiscal year will be higher than the target.

However, the World Bank, Asian Development Bank and the IMF have projected that the growth this year would be below 7 percent.