AN OVERVIEW OF NATIONAL BUDGET IN BANGLADESH

Government forecast of a government’s expenditures & revenues for a specific period of time.

The period covered by a budget of the government of Bangladesh is a financial year that starts on
1 July of a calendar year & ends on 30 June of the next calendar year. Government budget
contains the strategies for mobilization, allocation & disbursement of public money by means of
fiscal & monetary operations with due consideration of political, economic, & bureaucratic
decision making process. It developed in Bangladesh on the basis of legal requirements,
economy’s management needs, conventions, functional conveniences as well as
accounting & auditing requirements, including transparency & accountability.

The Constitution of Bangladesh, however, does not use the term budget. Instead, it uses an
equivalent term ‘Annual Financial Statement’, which is to show the estimated receipts &
expenditures of the government for a particular financial year. Government budget in the country
has two parts: Revenue & Development. The former is concerned with current revenues &
expenditures ie, maintenance of normal priority & essential services, while the latter is prepared
for development activities. Formulation of the two budgets follows different procedures. Their
financing pattern & the delegated authorities of incurring expenditure in different tiers in them
are also different. Receipts in revenue budget are: domestic receipts (tax & non-tax); foreign
grants; capital receipts (foreign loans); domestic capital (net of current receipts & expenditures in
public accounts); extra-budgetary resources (debenture of autonomous bodies, their self-
financing & accumulated balance, & materials at stock); & domestic loans & advances (net).

Receipts in development budget are grouped as public & private receipts. Public receipts are the
revenue surplus (revenue receipts minus revenue expenditures), incomes through new measures
(such as new taxes), net domestic capital, & extra budgetary resources. A special form of public
receipts is the foreign aid (project aid, counterpart fund from commodity aid & net food aid).
Receipts under the private head for development budget are generated through direct private
investment, borrowing from banking system & foreign private investment. Revenue budget is
prepared by the Finance Division & the agency to prepare the development budget is the
Planning Commission.

Preparation of the revenue budget is a multi-stage process implemented under a time schedule.
The first stage is the printing of departmental estimates, which is followed by printing &
distribution of Budget Forms (Estimating Officer’s forms) for supply to the accounts officers
concerned, who fill them up with estimates from all controlling offices & send consolidated
estimates to the ministry of finance. The ministry of finance then examines the estimates,
receives schedule of new expenditures & information on actual expenditures of agencies &
organizations in last six months, reviews new estimates on the basis of these information, &
prepares a rough edition of the budget & the schedule of new expenditures. The ministry also
collects forecasts of foreign development assistance & development programs from ministry of
planning & after making necessary adjustments, prepares the budget documents for presentation
in the JATIYA SHANGSHAD (Parliament) for discussion & approval.
Two constituent parts of the government budget are the consolidated funds (Fund) & the public
accounts (Account). These are not separate entities but are distinguished by differences in
receipts & disbursements. Consolidated Fund includes all receipts of the government, all loans &
grants received from domestic & foreign sources & the recoveries of loans & interest thereon.
Receipts in Public Accounts of the Republic represent the part of the exchequer, which do not
constitute the Consolidated Fund. These relate mostly to transactions, in respect of which the
government acts as custodian or banker in trust. These receipts include provident funds of
government employees, post office savings deposits, various deposit accounts (local funds,
judicial deposits, foreign aid deposits etc.), & adjusting heads like suspense & remittances.

Stages of budget procedure in Bangladesh are preparation, approval, implementation, & follow-
up. Policy components of the budget are:

(a)    Fiscal measures or revenue policy;

(b)   Expenditure proposed for basic functions of the government,

(c)    Development or public investment, ie, ADP;

(d)   Money budget, commonly called credit & liquidity program; &

(e)    Authorization for implementation of these policies.

The finance minister places the budget before parliament in June. It accompanies an introductory
speech known as budget speech consisting of two parts. Part one deals with the overall financial
& economic conditions prevailing in the country & government economic performance during
the last one year & government economic plans & programs & the budgetary allocation. Part two
deals with taxation measures. After budget discussions, money bills, supplementary bill, &
appropriation bill are placed before the parliament. If, for any reason, it is not possible to pass the
appropriation bill within 30 June, a vote on account bill has to be placed before the parliament.
Usually, through this bill an amount equivalent to two months expenditure is sanctioned

Implementation of the approved budget is carried out through various rules & orders embodied
in General Financial Rules, Treasury Rules & the Delegation of Financial Orders issued by the
finance division of ministry of finance. Authorizations embodied in the Appropriation Act
constitute the outer framework of a control, while expenditure sanction & disbursement by
executive authority at various levels follows a given pattern of delegated financial powers.
Budget implementation also involves balancing of government incomes & expenditures.
Measures for realization of income & its quantum & the direction of expenditure affect the
economic life of corporate bodies, individuals & households of different income groups
differently during the budget year.
BUDGET 2010-11

Tax revenue  in 2010-11 was 54.9%, non NBR tax revenue is 2.6%, non tax revenueis 12.7%
foreign grants is 3.6% of the  total revenue. The ambitious revenue target for FY10, which was
set at 16.6 per cent higher than the realized figure of FY09, marginally fell short of target by   
1.9 per cent. The realisation in FY10 was 14.4 per cent higher than the corresponding figure of
previous fiscal year. Tax component grew by 13.2 per cent during this period, while NBR and
Non-NBR components grew by 13.0 per cent and 18.6 per cent respectively. The incremental
contribution of VAT in total revenue growth was about 31.6 per cent, while tax on income
contributed only 19.6 per cent to the added revenue intake. To match the high reaching
expenditure target in a pre-election year, the government has set a new height in its revenue
target. According to the new target of revenue earnings, the government will have to collect
17.1 per cent more revenue in FY10 whereas NBR will have to record a 19.15 per cent growth.
Given the past record of revenue collection, this is just an unachievable target! Its seems that
the government (average 11.5 per cent) first decided on a high spending outlay and then tried
to make adjustment for the financing sources leading to improbable resource projection.
FINDINGS OF FY 2016-17 BUDGET:

There are some sectors in which special concern is needed .The government should be aware of
this factors. After studying the FY 2016-17 budget we have figured out some ways to get the best
benefit from the budget. They all are given below:

 Allocation on the educational sector should be revised; this will help us invent more
efficient techniques in every sector which will make Vision 2021 easily achievable.
 It is high to make the stock market stable. To do so, a new institution named Stock
Market Rehabilitation should be officially structured for pressurizing the present &
upcoming foreign entrepreneurs & companies to put at least 10% share of their respective
companies within a year at Bangladesh share market.
 New kind of taxes such that ‘Coal Import Tax’ & ‘Carbon Tax’ should be introduced, by
which we can buy coal from international market to meet our increasing demand for
energy production & allocation.
 ‘Carbon Tax’ should be imposed primarily at lower rate on the all companies which leave
carbon gas in nature. This will help us step by step, recovering our polluted nature by
creating planned forestation in every city and industrial area.
 For collecting the income tax properly, finding out the eligible people by endowing job
seekers for a short period, National Board of Revenue can earn more than its estimated
earnings.

Last one is can be modified by my suggestion-

 Focus resources on improved auditing, processes, and tools

 Use simple segmentation to identify larger collection opportunities
 Ensure regular updates to the taxpayer registry
 Use electronic channels for simple transactions
 Simplify the tax system to encourage formalization
 Tax should be imposed to VIP road user
 Reward on tax pay system to motivate eligible people who do not give tax
 Impose tax on domestic flight