The matter was discussed by the Fiscal Coordination Council (FCC) at a meeting chaired by Finance Adviser Mirza Azizul Islam yesterday.

Azizul told The Daily Star that the meeting mainly discussed the budget size and government's revenue 'situation'. A final decision on budget size would be taken in consultation with the ministries.

Sources said revenue collection by the National Board of Revenue as well as non-tax revenue collection are far below their targets for the current fiscal year.

Between July 2006 and March 2007, the NBR revenue collection grew by only 8.51 percent against the target of 20 percent for the fiscal year.

Revenue collected by the NBR this fiscal year stands at Tk 25,100 crore.

Non-tax revenue collection between July '06 and January '07 grew by only 4.5 percent while the target for the current fiscal year has been set at 11 percent.

The government has collected Tk 4.960 crore in non-tax revenue this fiscal year.

In this context, the budget may be cut with the axe falling mainly on the ADP.

The budget comprises Tk 69,740 crore and the ADP Tk 26,000 crore.

The ADP size could be slashed to around Tk 20,000, sources said, adding that this would be done not because of resource constraint but because of lack of implementation capacity of the ministries concerned.

Planning ministry sources said a number of 'unncessary projects' would also be omitted from the ADP to lessen the burden on the budget.

The government would make cuts in the revenue budget while spending for law and order enforcement and the election might go up.

The FCC observed a healthy GDP growth and improvements in remittance, exports and foreign exchange reserve.

The meeting expressed concern over high inflation rate. It however noted that government measures have reined in high credit growth, which is partly responsible for pushing up inflation.

Between January 12 and April 17, government borrowing was brought down to Tk 4,300 crore. Government borrowing stood at more than Tk 6,000 crore before the present caretaker government took over on January 12.

Private sector growth fell 0.2 percentage point after the January 12 takeover.

According to Bangladesh Bureau of Statistics, GDP growth in the current fiscal year is expected to be 6.53 percent, which would be 0.2 percentage point down from last year's 6.71 percent.

Sources said the FCC is happy with the expected 6.53 percent GDP growth despite the political turmoil over the past year.