Bangladesh's fiscal deficit likely at 4% of GDP for FY15

Based on our revenue and expenditure analysis, analysts expect a fiscal deficit (excluding
grants)  of  c.4%  of  GDP for FY15,  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 of Bangaldesh 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.