One of the most important financial instruments that any business may employ to

accomplish its goals is the budget. The budget is even more crucial for government
organizations because it aids in outlining the government's priorities and allotting funds to
accomplish those goals. As a result, a budget is a crucial tool for assessing how well the
government has planned its income and expenditure keeping in mind the economic
conditions, whether the budget is in accordance with their macroeconomic goals, and
finally the effectiveness of the budget in solving issues without deviations.
This paper critically examines the FY2022-23 budget analysis and provides a forecast for
the FY2023-24 budget. The study's major purpose is to review the budget allocations for
various sectors and programs in the FY2022-23 budget and assess their efficacy in
fulfilling their intended goals. Furthermore, the paper seeks to identify the key economic
indicators that affect the government's budget and financial performance in the previous
year.
A combination of qualitative and quantitative research techniques will be used to carry out
the study. Analyzing the laws, rules, and regulations that control the budgeting process is
part of the qualitative research methodology. The budget process will be looked at in detail
in this essay, covering the creation of the budget plan, legislative branch approval, budget
implementation, and budget monitoring. The research will also look at the political and
economic elements that might affect the budget-making process and the results that are
anticipated. The quantitative research method will involve an analysis of the budget data,
financial statements, and economic indicators. The primary economic indicators that have
an impact on the budget as well as the budget allocations for various programs and sectors
will be the main topics of the data study. The efficacy of the budget in attaining the stated
goals will also be examined in this study.
The research will give a thorough examination of the various sectors and programs covered
by the FY2022-23 budget. The study will look at how finances are allocated for programs
like education, health, military, infrastructure, and social welfare. The study will assess the
success of the budget allocation in attaining the desired results, such as improved
educational quality, improved healthcare services, and reduced poverty and inequality.
The research will also look at the major economic indicators that have an impact on the
government's finances and budget for the preceding year. The analysis in this article will
focus on variables including gross domestic product (GDP), inflation, unemployment, and
tax receipts. The research will shed light on how well the government has managed the
economy and raised money to balance the budget.
The study's findings will be presented in the report methodically and logically. It will start
by outlining the budgeting process and the significance of budget analysis. The budget
allocations for FY2022-23 will then be thoroughly examined, along with the extent to
 which the budget was successful in attaining its stated goals. The report will also look at
the major economic indicators that have an impact on the government's finances and
budget for the preceding year.
The study will end by sharing ideas for improving the budget process for the years 2023
and 2024. This advice will come from the study's results and help the government make
better choices about finances. It will look at how well the government is using money to
reach its goals. The objective of this paper is to enhance comprehension and knowledge
regarding financial management and budget analysis in governmental establishments. The
research aims to shed light on the budget procedure, the variables that influence its results,
and how well the government handles the economy and creates income to finance the
budget. Furthermore, the document is set to propose suggestions to enhance budget
allocation and management to improve the government's capabilities to reach its goals,
while also stimulating economic growth and development.

2.0 Overview of Budget:

2.1 Government Revenue:

In Bangladesh, the government has set a GDP growth target of 7.5%, and the budget for the
fiscal year 2022-23 has a total worth of BDT 6.78 trillion. The government has set a revenue
collection target of BDT 4.33 trillion and the budget is to yield a deficit of BDT 2.42 trillion,
additionally. The budget deficit accounts for 5.40% of the GDP.

The aim for FY2022-23 is to generate an extra BDT 44,079 crore in revenue and foreign grants,
which represents an 11.24% increase from the revised budget of FY2021-22. Non-tax revenues
account for 10.39% of the total revenues (excluding foreign grants) of BDT 433,000 crore, while
tax revenues account for the remaining majority of 89.61%.
For FY2022-23, it has been projected that BDT 3.70 trillion in tax revenues from NBR will
account for 54.57% of the total budget. That is a rise of 12.12% from the previous fiscal year.
Domestic borrowings will account for 21.58% of the total budget, which is a 17.74% increase
from the previous financial year. Borrowings from abroad will make up 14.08% of the total
budget, which is around BDT 95,458 crore and nearly 23.94% higher than the revised budget of
the previous fiscal year. That denotes that borrowing has increased significantly.
Around 38.16% of tax revenues from NBR will come from Value Added Tax (VAT), making it
the largest share. There is a higher emphasis on indirect tax. The second largest proportion of the
NBR's overall target for tax revenues will come from income tax, contributing 32.71%.
Furthermore, 15.82% and 11.89% of the NBR taxes collected will come from supplementary and
import duties.
2.2 Government Expenditure:

For the fiscal year of FY2022-23, the total expenditures have been set at BDT 6.78 trillion in the
proposed budget, which marks a 14.25% increase from the revised budget of the previous fiscal
year. Public service, education, and technology, as well as transport and communication, will
account for the largest total expenses, with percentages of 32.61%, 14.74%, and 12.02%,
respectively. In their respective sectors, the allocation has increased by 18.72%, 13.94%, and
23.74% compared to the prior fiscal year's budget. In addition, 6.21% has been allotted for the
agriculture sector, which has seen a 20.41% increase, and 11.85% has been allocated for interest
payment, which has experienced a 12.82% increase in comparison to FY2021-22. The
government's expenses on interest payments rose about 22 percent to Tk 40,792 crore in the first
half of the fiscal year. This is due to higher domestic and international borrowing.
The allocation of 5.44% of expenditures to the health sector has increased by 14.22%. The
lowest allocation of 0.60% is for industrial and economic services, a massive decrease of 10.28%
in comparison to the previous fiscal year.
BDT 4.18 trillion, or 61.71% of total expenditures, has been set for operating expenditures, and
another BDT 2.60 trillion, or 38.29%, has been set for development expenditures, which account
for 5.83% of GDP. This proposed development expenditure is 16.97% higher than the revised
budget for FY2021-22. Construction of Rooppur Nuclear Power Plant, Dhaka Mass Rapid
transit, railway of Padma Bridge, etc shall attribute to this rise in developmental expenditure.
Although allocation rose, the actual implementation costs are much higher. Delays in
implementation of mega projects have repercussions in the form of cost escalation.
The five sectors mentioned above have been allocated 77.30% of the total development
expenditure allocation. Among them, the transportation and communication sectors have been
assigned the highest allocation of 27.0% of total development expenditures. Moreover, education
and technology received 18.6% of ADP in FY2022-23, which was 19.7% in FY2021-22, and
health received 7.2% of ADP in FY2022-23, up slightly from 6.6% in FY2021-22.
Growth of credit to the private sector has been set at 15.0% in FY2022-2023 almost at par with
the revised targets for FY22. Inflation is assumed to be stable at 5.6% in FY23. However, as of
March 2023, the inflation is 9.33% according to Bangladesh Bank. This means inflation has
outstripped the target by 3.73%. Rising commodity prices can be blamed for such phenomena.
Both food and non-food items are exhibiting rising prices due to increases in material and fuel
costs.
The growth target for export earnings has been set at 20.0% in FY2022-2023. However, export
growth as of Jan 2023 is at 15.3%. During the fiscal year, exports have been growing at an
overall decreasing rate which is not desirable for the economy.
The growth target for import payments has been set at 12.0% in FY2022-23. Imports, though
generally high, have shown a falling trend due to government measures to decrease them to keep
the dollar crisis at bay. As of February 2023, import is 446.16 billion which is lower than the
previous month.
The volume of remittances reached $14.01 billion in the first eight months of this fiscal year
(FY2023). The amount was $13.43 billion recorded in the corresponding period last year.
The exchange rate however shows a falling value of Bangladeshi currency against the dollar.
This is due to global inflationary pressure, the declining Balance of Payment position, and the
rise of corruption.

3.0 Critical Evaluation of FY2022-23 Budget

3.1 Budget Major Claims:

The main aim of the government was to overcome the harmful effects of the pandemic. The
budget for FY 2022-2023 was created with that in mind.
28 financial and incentive packages worth Tk. 1 lakh 87 thousand 679 crores were announced
and implemented during the post covid era, which directly benefited about 73 million people and
about 1,72,000 organizations.
In the first eleven months of the FY2021-2022 export earnings were US$ 47.17 billion, which is
34.09 percent higher than the export proceeds of the same period of the previous fiscal year.
The remittance income declined slightly from July to May of FY2021-2022 as compared to the
same period of the previous fiscal year
The government hoped that the export will continue their rising trend and that the remittance
received shall rise as opposed to that it falls in FY2022-2023.
As per the official announcement the government hoped to: 1) contain inflation and enhance
domestic investment; 2) finance additional subsidies required for the increased price of gas,
power, and fertilizer in international markets; 3) utilize funds available through foreign
assistance and ensuring timely completion of high-priority projects of ministries/divisions; 4)
ensuring timely completion of projects in education and health sectors; 5) increasing collection
of local Value Added Tax and raising the number of individual tax-payers and 6) maintaining
stability in the exchange rate of taka and keeping foreign exchange reserves at a comfortable
level.
The main strategy undertaken was to increase the supply while reducing the growth in demand.
The budget was carefully crafted to include subsidies, incentives, and sector-wise allocation for
the FY2022-2023 keeping in mind the core policy objective of containing inflation and achieving
the targeted economic growth.
3.11 Challenges:

Due to the Ukraine-Russia war, importing the same volume of nine essential commodities for
Bangladesh (crude oil and refined oil, LNG, wheat, fertilizer, palm oil, coal, soybean oil, maize,
and rice) would cost an additional US$ 8.2 billion in 2022 in comparison to 2021 due to price
hike.
In October 2021, the amount of foreign exchange reserve was US$ 48 billion, which has now
declined to US$27.4 billion in Mar 2023. That is a massive unsustainable 43% decline. At this
rate reserves are set to be depleted completely.
The overall budget deficit for the proposed budget will be Tk. 2,45,064 crore which is 5.5
percent of GDP.
3.12 Measures taken:

 Subsidy/incentives expenditure on fuel, electricity, gas, and fertilizer: As a result, the

estimates of subsidy and incentives expenditure on the revised budget of FY2021-2022
had to be increased to Tk. 66,825 crore (1.70 percent of GDP). This expenditure has been
increased to Tk. 82,745 crore (1.90 percent of GDP) in the initial estimate of the budget
for FY2022- 2023.
 Encourage Remittance growth.
 To maintain its revenue level through taxes, the National Board of Revenue seeks to
include a provision in the income tax law that it would ask utility-providing agencies to
disconnect the supply of gas, electricity, and water supply within 21 days from the date of
receipt of the notice of supply disconnection.
 The government imposes five percent VAT on locally made mobile phones, and fridges.
 The government reduces the corporate tax to 12pc for non-RMG sectors.
 Cigarettes are costlier.
  Ten percent tax increase on shaving, beautification, toiletries, disinfectant, and depilatory
items
 Textile sector to enjoy a reduced tax of 15pc till 2025.
 Ultra-rich to pay more excise duty on bank accounts.
3.2 Critical Analysis of Our Group on FY-2022-23 Budget:

1. The main criticisms of the FY2022-23 budget in Bangladesh include concerns about
inflation, the need for more support for low and middle-income groups, and the need for
investment in human resources and raising labor productivity. The budget must address
the needs of the millions of people who have fallen into poverty due to inflation and other
economic challenges. The government should consider providing cash support to the
poorest segments of the population and removing taxes on essential goods to hold back
their prices. There needs to be an effort to keep the commodity prices at bay.
2. Lower corporate tax may encourage higher innovation and productivity. However, lower
tax revenue deepens the deficit.
3. The budget focuses on maintaining a stable economic recovery and incentivizing export
expansion and diversification, but there has been little growth in reality. In Jan 2023
export growth is at 15.3% which is lower than the target of 20%.
4. The government must invest in education to address the learning loss caused by the
pandemic. This includes financial support and incentives for children who dropped out of
school, effective learning programs for those still in school, and additional skills training
for youth who are out of school.
5. The government must increase its tax-to-GDP ratio, which is one of the lowest in the
world. This requires streamlining tax policies and ensuring that the tax administration is
automated and conducive to plugging longstanding issues of leakages, corruption, and
evasion.
Overall, the research results suggest that the budget may face criticism for not doing enough for
low and middle-income groups, and not investing in human resources.
4.0 Budget Expectation for FY2023-24

The national budget for the fiscal year 2023-24 in Bangladesh is expected to be announced on
June 1, 2023. AHM Mustafa Kamal, the finance ministry recently declared in April 2023 that the
upcoming fiscal year's budget plan will aid the business sector and included in the plan may be
tax relief measures alongside a drop in tariff rates on materials imports and aid for the expansion
of the export sector.
1. The total outlay of the national budget for FY 2023-24 is expected to be Tk 7.46 trillion.
2. The GDP growth target is set at 7.8%, which some economists and finance officials consider
to be an overly ambitious target. Currently, in 2023 the rate is 5.3% whereas the target for this
fiscal year was 7.5%.
3. Inflation is expected to be kept in check at around 6.0% by officials although it is 9.33% as of
March 2023.
4. There is a resource mobilization challenge for the government to finance the new budget,
which may result in a wider overall budget deficit of 6.0% in terms of the country's GDP.
5. The subsidy requirement for the next fiscal year is estimated to cross Tk 1.0 trillion.
6. The annual development program (ADP) is expected to be Tk 3.0 trillion, which is
substantially higher than the current fiscal year's ADP of Tk 2.46 trillion.
7. Officials have been asked to give priority to projects that are essentially needed and keep away
the less-important ones like mega projects to balance fund allocation, considering resource
constraints.
8. Measures need to be taken to keep money circulation under control to contain inflation.
9. The meeting also discussed larger subsidies, high inflation, exchange-rate volatility, and lower
inflow of remittance as challenges facing both the present and next year's budget.
10. The revenue-earning target is expected to be almost like the current budget.
11. The finance minister has asked for further cuts on unnecessary public-sector spending to
compensate for the external trade loss due to the prolonged war between Russia and Ukraine.
12. The dwindling foreign-currency-reserve situation needs to be addressed by taking further
measures to raise the reserve position and cutting demand for dollars. Foreign purchases, visits,
etc need to be controlled.
13. To contain inflation, aggregate internal demand needs to be kept low, which requires a lower
budget deficit and higher macroeconomic stability.

Overall, we will expect the government to focus on addressing the challenges of resource
mobilization, subsidy management, inflation, and revenue generation while keeping
macroeconomic stability in mind for the upcoming FY2023-24 budget. The government also
needs to prioritize essential projects and cut unnecessary spending to manage the budget deficit.
5.0 Analysis of Priority Sector Budget & Expectation

The government should prioritize education and technology and Industrial and economic
services.
 Funding must be provided to equip the youth with digital skills and knowledge of data science,
which can become a key driver for industrial productivity and economic growth. With a higher
skill level, unemployment can be driven down. Government can fund these advanced IT courses
to encourage their enrolment and accessibility. Currently, 99977 crores have been allocated
which is 18.6% of ADP however it should rise to 25% in the next budget.
Bangladesh's exports simply need to be more competitive to increase Export revenue and
decrease BoP deficit. The weakening Bangladeshi currency trend needs to be halted thereby the
export must rise and import fall. To make local products more innovative, attractive, and price
competitive, higher allocation in the form of subsidies, tax relief, and export restrictions must be
made. Currently, this sector receives 4041 crores which fell from the previous fiscal year. This is
only 0.6% of the total allocation. This needs to rise to 10%.
The government has prioritized the transport and communication sector currently. This needs to
be deprioritized as the transport system is adequately developed and there are other sectors that
need fund allocation more. This sector currently takes a whopping 23.74% of expenditure which
needs to be reduced to 12%.
6.0 Findings & Conclusion

To support its growth aspiration of becoming an advanced economy by 2041, the government
will increasingly have to depend on local revenue mobilization to fund its expenses. Bangladesh
has one of the lowest tax-to-GDP ratios in the world, which limits the government's fiscal space
presently and, in the future, at less than 10 percent in the south.
Automating the tax administration and streamlining the tax policy is necessary to address the
longstanding issues of leakages, corruption, and evasion.
The income tax and VAT laws should be restructured and should also give guidelines to
significantly check the unauthorized transfer of funds abroad, reduce non-performing loans, and
minimize the scope for illegal and non-transparent sources of income.
The budget should also include added provisions for food security, facilitate rural and urban
consumer access to food and non-food items through rationing and improved storage, and
transparent distribution as the poor is suffering heavily right now. Allocations for pension and
healthcare coverage for citizens over 60 years should also be reflected in the budget.

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