Bangladesh budget takes aim at energy shortages, poverty

DHAKA, June 9 (Reuters) - Bangladesh's government unveiled a budget for fiscal 2011/12 year on Thursday which increases spending on key sectors by nearly a third to tackle power shortages which are curbing growth and deterring investment.

Spending on key development needs such as power and transport will increase by 31 percent from this fiscal year to 460 billion taka ($6.3 billion), of which 60 percent would be provided by the government and the rest by overseas lenders, Finance Minister Abul Maal Abdul Muhith told parliament as he presented the 1.6 trillion taka ($22 billion) budget.

Overall spending will increase 23 percent in the year from July 1 to 1.6 trillion taka, he said. The government aims to cap its deficit at 5 percent of gross domestic product in 2011/12, up from a revised 4.4 pct of GDP in 2010/11.

It is targeting a 27 percent rise in tax revenue to 1.18 trillion taka in the coming fiscal year, largely due to improvements in tax collection and crackdowns on evasion.

Bangladesh aims to bolster economic growth to a record 7 percent in the coming year, from 6.7 percent targeted in 2010/11, and expects inflation to ease slightly to 7.5 percent against a revised target of 8 percent this year, he said.

Price pressures are a major concern for the government as nearly 40 percent of the country's more than 150 million people live on less than $1.25 a day.

The budget is the third for Prime Minister Sheikh Hasina's government, which won office with promises to cut poverty, improve utilities, and produce and supply more energy.