Budget in Bangladesh
Prepared by- SUMAYA HOQUE
ID- 2010566
1. Introduction:
Government budget, forecast by a government of its expenditures and revenues for a fiscal
year. In general, a high proportion of economic activity is controlled, directly or indirectly, by
various levels of government. Thus, the budget has taken on several other functions as well as
the simple monitoring of the overall revenue and expenditure of government. Expenditure
programs are now planned in considerable detail, but the sheer scale of public spending raises
major control problems, and varying systems of control have been tried in different countries.
Taxation is used not only to raise revenue but also to redistribute income and to encourage or
discourage certain activities. Government borrowing, to finance recurring deficits, is so
substantial that budgetary policy has important effects on capital markets and on interest and
credit generally. Because the budget is now so important to national economies, several
different procedures for deciding on the structure of the budget have been developed, and
these vary considerably between countries.
The budget has also come to be used to achieve specific goals of economic policy. It
was long recognized that government borrowing could have important effects on the rest of
the economy. As the scale of government activity increased, the levels of expenditure and
taxation were seen to have substantial direct effects on the total demand for goods and
services in the economy. This raised the possibility that by changing these levels the
government could use its fiscal policy to achieve full employment and reduce economic
fluctuations. This stabilization function has been used by many countries, with varying
degrees of success, to expand the economy out of recession and to control inflationary
pressures.
As well as affecting the overall economy, the budget may have significant (intended
and unintended) effects in specific areas. Taxes affect incentives to work or to consume,
while taxes, benefits, and expenditures all affect the distribution of income. In this manner,
budgets, particularly those that cause major changes, have considerable political as well as
economic impact. Budget, government the planning and detailing of the government's
revenues and spending for the fiscal year in Bangladesh, which runs from July 1 to June 30 of
the calendar year. The government budget outlines plan for mobilizing, allocating, and
issuing public funds through fiscal and monetary operations, considering political, economic,
and bureaucratic considerations. It emerged in Bangladesh because of legislative
requirements, economic management requirements, conventions, operational conveniences,
and accounting and auditing standards, including transparency and accountability. The
Constitution of Bangladesh, however, does not use the term 'budget'. Instead, it uses the term
'Annual Financial Statement,' which refers to the government's expected receipts and
expenditures for a given fiscal year.
2. Overview of Budget:
The overall spending for FY2021-2022 has been estimated at BDT 6,03,681 crore, or 17.5
percent of GDP where estimated revenue is BDT 3,92,490 crore, hence total deficit is BDT-
2,11,191 crore.
3. Source of Revenue
Figure 1: Source of Revenue
Figure 1 depicts the source of revenue of Bangladesh government. It clearly shows that Gov
aspires to obtain the lion share of revenue from Tax, especially National Board of revenue
(NBR). Precisely, the proposed budget expects to receive 54,7 % which BDT 3,30,000 crore.
In comparison Gov will get the least revenue from foreign grants which is 0.6% or 3,490
crore takas. Non-NBR tax revenue is anticipated to be Tk. 16,000 crore, while non-tax
revenue is estimated to be Tk. 43,000 crore.
4. Object of Expenditure:
The overall spending for FY2021-2022 has been estimated at Tk. 6,03,681 crore, or 17.5
percent of GDP. Out of total expenditure 18.7% has been allocated for public administration
which is the highest portion. The second highest has been allocated for education and
technology, which is 15.7%.
Figure 2: Objects of expenditure
Allocation proposed for the social infrastructure sector in the proposed budget is Tk. 1,70,510
crore, which is 28.25 percent of total allocation, in which allocation for human resources
sector (education, health and other related sectors) will be Tk. 1,55,847 crore.
Figure 3: Objects of expenditure, Sector-wise
Figure 3 indicates the highest allocation goes to transport and communication which
is 25.8%. the second highest allocation is devoted for education and technology which
is 19.7%. given the time of pandemic 6.6% of total expenditure has been allocated for
the health sector. given the deficiency of electricity and power the budget has been
allocated 11.5% for energy and power sector.
5. Financing Mechanism
The main source of the revenue comes from tax and non-tax revenue. since the projected
expenditure will exceed the revenue therefore government need to borrow the money.
The table below indicates that the government aspired to obtain deficit finance from
foreign and local sources. The net borrowing is projected BDT 9 7,738 Crore. The
domestic borrowing is amounted BDT 1,13,453 Crore including both short term and long-
term debt mostly from banking sector.
Source of Deficit finance BDT Crore
Foreign Borrowing-Net 97,738
Foreign Borrowing (Statement V) 1,12,188
Foreign Debt Repayment (Statement IX) - 14,450
Domestic Borrowing (Statement VIB) 1,13,453
Borrowing from Banking System (Net) 76,452
Long-Term Debt (Net) 51,600
Short-Term Debt (Net) 24,852
6. Conclusion
In conclusion, it seems like this year the national budget is very challenging due to COVID-
19 pandemic. since the global economy experiencing sluggish economic growth therefore the
export industry will face certain challenges. Moreover, foreign earning in the form of
remittance may go down. The budget should prioritize the hard hit due to the pandemic to
maintain lower portion of unemployment.
