Introduction

Budget provides an indication of how a country manages its public finances so as to maximize the
benefit for its citizens. Budget is also reflective of the road map for national development. A huge
amount of information is contained in the Budget Documents. However, while every citizen is, one
way or other, affected by the budget, only a few fully understand its significance. For the citizens to
have a comprehensive understanding of the national budget, it is essential that they understand the
basics of budgeting, budget terminology, key components of the budget cycle, budget data and the
implications the budget has for national development.

‘Budget Booklet 2012-2013’ is an attempt in this direction. It is designed to help citizens fully
understand the National Budget. The document, by clarifying the key concepts and answering the
frequently asked questions about the budget, enables the readers to experience a gradual unfolding
of the budget-story so that he/she becomes aware of the intended benefits of such an exercise.

What is the Budget?

We all have needs that we want to satisfy. We can meet them by paying for the particular
products or services. As our resources are not unlimited we need to make choices and prioritize
what we find most important to meet. We decide upon what to do with the money we receive
and how we will spend that money.
Similarly, in a national perspective, the Government has needs in order to fulfill its commitments
and to provide services to the people. Because of scarcity of resources the Government has to
make choices and prioritize national needs. Accordingly, the Government plans its revenue
collection and sectoral expenditure for the coming year.

The National Budget

The National Budget is an account of how the Government proposes to collect revenue and
spend the collected money over a period of one year. The budget usually sets out expenditure
plans in accordance with the Government’s priorities. The Finance Division of the Ministry of
Finance is responsible for the preparation of the national budget and its presentation to the
Parliament. It is also responsible for monitoring the implementation of the budget. The budget
must be approved by the Parliament before it can be implemented.
The ministries/divisions have their budget allocations in two categories namely Non-development
and Development. Non-development budget allocations are finalized by the Finance Division in
consultation with the Line Ministries. Annual Development Program – (ADP) allocations are
finalized by the Planning Commission in consultation with Ministries and Divisions and then
forwarded to the Finance Division for translation into the Development Budget. 1
Some essential features of the national budget:
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budgeting that integrates policy, planning and budgeting within a medium term framework
(estimates for 1 year, and projection for 4 years);
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government’s strategic priorities;
‹ ;OL I\KNL[ WYVJLZZ MVJ\ZLZ VU [OL ZLY]PJLZ V\[W\[Z KLSP]LYLK HZ ^LSS HZ [OL YLZV\YJLZ
required (inputs); and
‹ ;OLI\KNL[WYVJLZZWYVTV[LZWYLKPJ[HIPSP[`HUKJYLH[LZVWWVY[\UP[PLZ[VOHYTVUPaLYLJ\YYLU[
and capital spending.

How Does the Budget Look Like?

The National Budget consists of 4 main components:
Revenue
Expenditures
Deficit
Financing

Where does the money come from?

The Government raises revenue from various sources in order to fund government activities and
development programs. These revenues are divided broadly into tax and non-tax revenues. Tax
revenues are those received from taxes on goods, services and international trade. Examples
include personal income tax, profit tax, custom duties, value-added tax (VAT), and tax on export.

The revenue collection for FY 2012-13 has been estimated at TK 1,39,670 crore, which is 13.4
percent of total Gross Domestic Product (GDP). The National Board of Revenue (NBR), aims to
collect tax revenues up to the total amount of Tk 1,12,259 crore. Revenue from Non-NBR
sources has been estimated at Tk. 4,565 crore. The target for Non-Tax Revenues for FY 2013 is
Tk 22,846 crore. This includes revenues from amongst others dividends and profits, interest,
administration fees, and charges and capital revenues.

Graph I: Revenues

Foreign Grants 3.2

Foreign Loans 6.5

Domestic Financing 17.6

TAX REVENUE (NBR):
Taka 1,122.59 BILLION (58.5%)

Non-Tax Revenue 11.9 VAT 36.0%

Import Duty 12.9%
Income Tax 31.5%
Tax Revenue (Non-NBR) 2.4 Tax Revenue (NBR) 58.5 Supplementary Duty 17.8%
Sector wise Resource Distribution ( Including Subsidies & Pension ) Others 1.8%
Source: Budget in Brief 2012-13, Finance Division, Ministry of Finance 2
How is this public money spent?
In FY 2013, total Government expenditure is planned to be Tk 1,91,738 crore (18.1 percent of
GDP), which is 19 percent higher than last year’s revised budget.

Non-Development expenditure
Non-development expenditures refer to the funds used to keep services operational. This
encompasses salaries of public officials, goods needed to provide services (such as medicines
and school books) and other services. Other examples of recurrent expenditures include social or
economic interventions, interest payments and unexpected expenditures. Non-development
expenditure in FY 2013 is planned at Tk 1,31,601 crore (12.6 percent of GDP).

Development expenditure
Development expenditures mainly include financing of public investment projects, which include the
construction of public infrastructure, such as roads, bridges, electricity grids and telecommunication.
The Annual Development Program (ADP) specifies the list of projects to be implemented during a
particular fiscal year.
The ADP details the development expenditure programs sector-wise, ministry-wise and agency-wise.
At a very early stage in the budget process, agreement is reached at the highest level, with the
participation of Budget Monitoring and Resource Committee (BMRC) headed by the Minister of
Finance, on overall resources and expenditures for any particular year. Development expenditure is
estimated at Tk. 55,000 crore (5.3 percent of GDP) for this year’s budget.

Graph II: Development & Non-Development Expenditures

Industrial & Economic Tk. 1,91,738 Crore

Services 1.4%
Recreation, Culture
& Religious Affairs
0.8% Miscellaneous
Expenditure
Housing 0.8% 11.7%
Education &
Public Order Information
& Security 4.8% Technology 11.5%

Interest 12.2%
Social Security
& Welfare 5.7%
Transportation &
Communication 7.0%
Public
Administration Local Govt. &
12.6% Rural Dev 7.4%
Agriculture Health Energy & Power
Defence 6.7% 5.0%
7.5% 4.9%
Sector wise Resource Distribution ( Including Subsidies & Pension )
Source: Budget in Brief 2012-13, Finance Division, Ministry of Finance 3
The ADP is financed from the following sources
‹ Revenue surplus
‹ Foreign grants and assistance
‹ Own resources of various autonomous agencies
‹ Domestic loans

Overall budget balance

If the government collects more revenue than it is spending, it is in surplus, while if the
Government spends more than it collects, there is a deficit. If the latter scenario is the case,
which is almost always the case in Bangladesh, the government needs to borrow money from
the domestic or external sources to cover this deficit.
Financing through external borrowing comes from various sources such as project aid, non-ADP
project aid, budget support for development, sectorwide program support in the form of grants
and loans. Borrowing from non-bank sources include national savings schemes, provident funds
and others.

Table 1: The Financing Plan for FY 2013

RBFY13 BFY12 Growth
Description FY13 Over RB
Crore Tk % of GDP Crore Tk % of GDP
FY12
Revenue Collection 139,607 13.4 114,885 12.6 21.6
Total - Expenditure 191,738 18.4 161,213 17.6 18.9
ADP 55,000 5.3 41,080 4.5 33.9
Non-ADP 136,738 13.1 120,133 13.1 13.8
Overall Deficit (Excl. Grants): 52,068 5.0 46,328 5.1 12.4
Financing
Foreign Grants 6,044 0.6 4,460 0.5 35.5
Foreign Loan-Net 12,540 1.2 7,399 0.8 69.5
Foreign Loan 20,398 2.0 14,036 1.5 45.3
Amortization 7,858 0.8 6,637 0.7 18.4
Domestic Borrowing 33,484 3.2 34,469 3.8 (2.9)
Bank Borrowing (Net) 23,000 2.2 29,115 3.2 (21.0)
Non-Bank Borrowing (Net) 10.484 1.0 5,354 0.6 95.8
Total Aid Requirement (Net) 18,584 1.8 11,859 1.3 56.7
Total Aid Req (Net, bln US$) 2.2 - 1.5 - 52.9
Total Aid Req (Gross) 26,442 2.5 18,496 2.0 43.0
Total Aid Req (Gross, Bln. US$) 3.2 - 2.3 - 39.5
Source: Finance Division, Ministry of Finance
4
 Budget Process

ng Commissio
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Source: Finance Division, Ministry of Finance.

Planning and policy

The Budget Cycle starts with formulation of relevant planning and policies. In order to ensure the
proper implementation of pledged deliverables, the Government formulates policies/planning with
varying time-frames. The single most important planning document that initiates budget
preparation is the 6th Five Year Plan titled “Accelerating Growth & Reducing Poverty”. In terms of
service delivery, the line ministries determine their strategic objectives and then identify the major
activities by operationalizing the strategies into actions. Ministries also consider sector specific
planning documents in doing so. One important sub-phase of planning stage is to define some
KPIs (Key Performance Indicators) and also to set targets, in quantitative terms, against the KPIs.
5
Budget preparation
Under the MTBF, the budget preparation process is completed in three phases:
(1) Strategic Phase
(2) Estimating Phase
(3) Budget Approval Phase
It is necessary to prepare/update Ministry Budget Framework (MBF) by Ministries/Divisions and
other Institutions in the Strategic Phase. The main objectives of revising and updating MBFs are:
(i) to make the linkage between Government's policy-priorities and the budgetary allocations
more explicit;
(ii) to strengthen the linkage between budgetary allocations and performance of the
Ministries/Divisions/Other Institutions and their subordinate departments and agencies; and
(iii) to prepare a realistic expenditure plan for the Ministries/Divisions/Other Institutions on the
basis of the resources available in the medium term.
In the Estimating Phase, line ministries prepare estimates for one year and projections for four
years. All the development and non-development expenditures of the ministry should be
accommodated within the expenditure ceiling given for them. These estimates/projections are
then sent to Finance Division and Planning Commission. After receiving the budget
estimates/projections from the line ministries, Finance Division and Planning Commission review
these estimates/projections to check for consistency with the policies and priorities and for
compliance with the ceiling and guidelines provided in the budget circular. The Finance Division
and Planning Commission finalize non-development and development estimates respectively in
consultation with the respective ministry. After the discussion is over, Finance Division compiles
these estimates/projections and places them before the Parliament for approval.

Budget execution
Once the Parliament approves the budget, the line Ministries, Divisions and Other Institutions can
spend funds allocated to their departments according to the approved expenditure plans. Each
spending is to be monitored and evaluated by the implementing departments themselves. A key
role of the Planning Commission is to monitor and evaluate the implementation of development
projects included in Annual Development Program (ADP). The Finance Division reviews quarterly
trends of the revenue receipts and expenditures against targets set out in the budget and the
Hon'ble Finance Minister submits a statement at the ensuing session of the Parliament on the
results of the aforesaid review and report on possible remedial measures.
6
Audit and evaluation
When the financial year comes to an end, public expenditures are audited independently. The
Office of the Comptroller and Auditor General (OCAG) of Bangladesh is responsible for auditing
government receipts and public spending and to ascertain whether expenditures have yielded
value for money in government offices, public bodies and statutory organizations. Throughout the
year, the OCAG conducts financial and performance audits covering various sectors of the
governments for the preceding financial year and submits reports. The reports are placed before
the Parliament to determine whether the public spending met its objectives, and whether the
implementing departments used their resources efficiently and effectively.

The Parliament plays its oversight role on public expenditure through three financial committees
of the Parliament, namely: (i) the Public Accounts Committee, (ii) Committee on Public
Undertakings, and (iii) Committee on Estimates. These committees make sure that public money
is spent in a transparent, effective and efficient manner.

People’s participation in the budget process

An active involvement of citizens in the budget process will ensure more transparent and
accountable management of public money that will, in turn, help reflect citizens' demands in the
national budget in a more effective way. There are two main possibilities for citizens to influence
the budget:

1. Pre-budget consultation at the central and regional level are held with the members of the
Parliamentary Standing Committees, think-tanks, research institutions, economists, media
representatives, private sector representatives, civil society organizations, and NGO
representatives; and

2. Participatory planning and open budget meetings are held at grassroot level. In participatory
planning meetings the local governments gather information to decide upon policy priorities,
revenue collection and expenditure. In open budget meetings the views of participants are
discussed and incorporated in the budget, where possible.

Sector-Wise Distribution of the 2012-2013 Budget

The National Budget for FY 2012-13 has been approved by the Parliament on 28th of June 2012.
The Line Ministries/Divisions have begun implementing the budget immediately after the
Parliament's approval.
7
 Table 2: The Sector-Wise Distribution of the National Expenditures

Share in Share in Change in FY13B Over

Sector BFY13 RBFY12 FY12R
% Croe TK %
Public Service 12.6 10.8 6704.0 38.5
Interest 12.2 12.3 3506.0 17.7
Education and Technology 11.4 11.6 3392.0 18.1
Agriculture 7.5 8.9 110.0 0.8
LGRD 7.4 7.4 2207.0 18.4
Transport and Communication 6.9 6.5 2856.0 27.3
Defence Services 6.7 7.6 662.0 5.4
Social Security and Welfare 5.7 6.4 652.0 6.3
Fuel and Energy 5.0 4.9 1587.0 19.9
Health 4.9 5.1 1183.0 14.5
Public Order and Safety 4.8 5.3 626.0 7.3
Industrial and Economic Services 1.4 1.0 1208.0 77.4
Housing 0.8 0.8 89.0 6.5
Recreation, Culture and Religious Affairs 0.8 1.0 63.0 4.1
Other(Memorandum Item) 11.7 10.4 5680.0 34.0
Total Expenditure 100.0 100.0 30525.0 18.9
Source: FSMU, Budget Wing, Finance Division, Ministry of Finance

How does this year’s budget affect your life?

Some highlights of this year’s budget:
Q
J Allocations for Public Services is set to increase by 38.5%
38,5% and will mainly go to subsidies and
public private partnership initiatives;
initiatives.
Q
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 Subsidies for agriculture, fuel, electricity and food remain as they are, to meet the gap
between the high international prices and the administered
administratedprices;
prices.
Q
J
 Transport and Power receive the highest percentage rate of the ADP to meet with the
Government’s objective to increase the power supply and enhance the quality of roads and
bridges.
bridges;
Q
J
 Substantial investments have been planned for the Local Government Division. One of the
main priorities is to ensure safe drinking water;
water.
Q
J
 Education is one of the socio-economic drivers. Hence the Government’s focus is to improve
the quality of and accessibility to education;
education. and
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 Climate change
change isis affecting
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everycitizen
citizenofofBangladesh.
Bangladesh.AnAamount
large amount
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the budget
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Climate Climate
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Trust Fund
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8
 Poverty Reduction and Gender Budget
The Government is laying significant emphasis on poverty alleviation and relevant programs have
been expanded and consolidated. The budget reflects this drive for more equitable growth:
‹ /PNOWYPVYP[`WSHJLKVUZVJPHSZLJ[VYZZ\JOHZLK\JH[PVUHUKOLHS[OU\[YP[PVUWVW\SH[PVUHUK
family welfare (11.5 percent and 4.9 percent respectively of the total budget);
‹ Over 51 percent (9 percent of GDP) of the total budget is aimed at reducing poverty directly or
indirectly;
‹ 0UJYLHZLKMVJ\ZVUZVJPHSWYV[LJ[PVUHUKLTWV^LYTLU[ZJOLTLZ^OPJOHJJV\U[ZMVY
11.9 percent of the total budget and 2.18 percent of GDP;
‹ In FY13, 26 percent of total budget has been allocated for gender related expenditure, which is
around 5 percent of GDP. A report containing gender related expenditure of 25 ministries has
been published; and
‹ :PNUPMPJHU[MVJ\ZWSHJLKVULTWSV`TLU[NLULYH[PVULUOHUJPUNLJVUVTPJNYV^[OHUKLUZ\YPUN
the envisaged development goals.

Key Projects and Achievements:

What Do We Notice from the Annual Budget?
Health
The present government is committed to ensure quality health services for all. The policies and
programs adopted over the last three years in this sector have now started yielding intended
results. Bangladesh has registered remarkable successes among the SAARC nations in terms of
reduction of maternal mortality and infant mortality rates as well as increased life expectancy.
According to Bangladesh Demography and Health Survey 2011, the under-5 infant mortality rate
has been reduced to 53 from 65 per thousand over the past four years. The maternal mortality
rate has also been reduced to 1.94 per thousand from 3.5.
The Government has introduced the e-Health program in 482 hospitals at zila and upazila level,
and a program has been launched to provide health services through mobile phone. Internet
connectivity has been provided to 800 health organizations. Telemedicine facility has been
introduced in 8 hospitals through which patients can now take advice of medical specialists at
upazila and zila level.
In order to improve the health quality of poor city dwellers living in 6 city corporations and 5
municipalities in Bangladesh, primary health care service is being provided through 27 urban
maternity clinics, 167 urban health centers and 656 satellite clinics. 30 percent of the services
delivered at the urban health centers are provided free of cost.

9
Agriculture
The agricultural sector has shown a consistent growth over the last three years. The average
growth rate was 4.7 percent per year. The Government targets to become self-sufficient in food
production by 2013 and has framed “The National Agricultural Policy, 2011’’ to achieve that
target. To support the farmers, the government has distributed 1.40 crore ‘Agricultural Inputs
Support Card’ among the farmers across the country and made arrangements for them to
open a bank account with Tk.10 only, in order to ensure availability of agricultural input and
agricultural credit.
To provide solutions on farmers’ needs, a new initiative ‘e-Agriculture’ has been implemented.
Information Centers have been opened with video conferencing and SMS functions. Currently,
the agricultural information communication centers in 95 unions have started their activities and
steps have been taken to open such centers in another 150 unions.

Youth and Sports

As of now, 56,801 unemployed youths - male and female, have been trained under the National
Service Program. Two years temporary employment opportunities have been created for
56,126 youths. In FY 2012-13, there is a plan to provide training to another 17,744 youths
under this program. To encourage self-employment, the Directorate of Youth Development has
distributed Tk. 219.33 crore as micro-credit among 1,15,460 trained youths, male and female,
from January 2009 to March 2012.
The process of modernization and renovation of stadiums and women sports complexes is
going on at the district level throughout the country including Dhaka.

Social Security and Protection

Bangladesh is striving to eradicate hunger and poverty. According to the ‘Household Income
and Expenditure Survey 2010’, poverty head count ratio has been reduced from earlier
40 percent to 31.5 percent. Around 30.1 percent of rural and about 25.3 percent of all the
families of the country are being brought under the coverage of social safety net programs. In
addition to broadening the coverage of social safety net programs, a number of new programs
have also been introduced to improve the social conditions of the poorer section of the society.
One of the most important programs is ‘Employment Generation Program for the Poorest
(EGPP)’. Another important program is the “One House One Farm Project”, which has been
implemented in 17,388 villages of 64 districts. This project has directly benefited more than one
million families.

Power and Energy

Power is one of the main drivers of the country’s economy. The government has, therefore, laid
particular emphasis on the development of the power sector. It has prepared the Power Sector
Master Plan (PSMP) 2010 and kicked-off the implementation agenda by installing new power
plants, upgrading transmission and distribution systems, diversifying renewable energy sources
and identifying ways to ensure economic use of power.

10
 Food Security
The Government has laid emphasis on food security. To ensure intergenerational food security,
the ‘Country Investment Plan for Food Security’ and the ‘National Food Policy Plan of Action’
have been formulated and are under implementation.
Around 12 lakh fair price cards have been distributed among the low and limited income groups
to provide them with food support.
Besides, Open Market Sales (OMS) operation has been expanded to ensure food for the poor at
low prices.

Overall Education Sector

In order to reduce human poverty, the Government has prioritized education as the most
significant strategic tool and is pledgebound to ensuring access to education, eradication of
illiteracy by 2014. Meanwhile, ‘Education Policy, 2010’ has been formulated.To promote female
education, distribution of stipends program is being implemented. Presently the male-female
student ratio is 47:53 which is the second highest in South Asia. As many as 43.38 lakh
students from the secondary to graduation level have been awarded stipends.
100 percent enrollment at primary level has been ensured. From 2011, examination on
completion of primary education has started taking place throughout the country under a
uniform system. As a result, it is now possible to assess the merits of primary students using a
set of uniform criteria. A policy on non-formal education has been formulated to eradicate
illiteracy. To enhance the quality of primary education efforts have been made to bring down the
teacher-student ratio to 1:47 from 1:50. This year’s budget ensures continuation of the stipend
program of about Tk. 4,000 crore, intended to prevent dropping out due to poverty.

Infrastructure
In order to develop the rural economy, this The government is encouraging investments
government undertook various projects of in risky but potential software and food
infrastructure development during the past processing industries. A total of Tk. 2,100
three years; 12,409 km of rural road and crore has so far been allocated to EEF (Equity
1,37,880 meter of bridges and culverts have and Entrepreneurship Fund), out of which, an
been constructed up to January 2012. amount of Tk. 1,225 crore has been
released. The projects established under EEF
The work of several key projects including
have been making significant contributions to
conversion of Dhaka- Chittagong Highway into
four lanes and Nabinagar-DEPZ-Chandra the agriculture and industrial sectors.
Besides, EEF assisted projects have
Road, development of Joydebpur-Mymensingh
generated 17,000 permanent and seasonal
road and construction of Teesta Bridge Project
employment.
are going on in full swing. A flyover has been
opened for traffic to ease cargo transport in the Since the establishment of a PPP office
Chittagong port. within the Finance Division, a number of PPP
projects on power plants, land ports and
Under the 20-year Railway Master Plan, the
other infrastructures have been successfully
objective is to turn the Bangladesh Railway into
implemented. Eight projects (appr. Tk.
a modern mode of transportation by improving
3,000 crore) under five
the quality of service.
ministries/divisions are to be
implemented on a pilot basis.
11
ICT : Digital Bangladesh
To fulfill the mission of ‘Digital Bangladesh’, it is important to ensure enhanced access to
information and modern communications resources. Importance is attached to establishing e-
Governance including e-Services, e-Education and e-Commerce. A new ministry namely
‘Ministry of Information and Communication Technology’ has been established. Major efforts
have been made to the expansion of internet and telecom services. 7 divisional towns, 46
districts and 36 upazilas have been brought under optical fiber network. Installation of this
network in 1000 unions is also underway. As of now, 400 upazilas including 25 inaccessible hilly
upazilas have been brought under Teletalk network.

Budget Documents Explained

The following budget documents are a selection of the documents available on the Ministry of
Finance website (www.mof.gov.bd):

1. Budget Speech: It is basically an overall policy pronouncement of the

Government consisting of 2 parts. Part I deals with the overall financial and economic condition
of the country, government economic performance during the last one year and government
economic plans and programs and the budgetary allocation. Part II deals with taxation
measures.

2. Budget in Brief: This document provides an overview of all aspects of revenue and capital
resources and development and non-development expenditure of the government.

3. Annual Financial Statement: It provides a summary of Budget Estimates of the receipts and
development and non-development expenditures of the government for a particular financial year
and Revised Estimates and Budget Estimates of the previous financial year.

4. MTBF: The MTBF consists of two parts, with Part I consisting of “Macroeconomic Outlook”,
“Fiscal Strategy” for the fiscal year, “Expenditure Priorities and Allocations” and elucidation on
“Medium Term Revenue Performance, Outlook and Strategy”. Part II of the MTBF consists of
“Ministry Budget Framework (MBF)”. Under the MBF, Ministries and Divisions lay down their
medium term strategy linking policies and priorities with resource allocation and that in turn with
the performance of departments and agencies.

5. Gender Budget Report: It provides gender disaggregated budget and beneficiary data for 25
ministries.

6. Consolidated Fund Receipts: The document provides details of receipts in the Consolidated
Fund of Bangladesh for all Ministries and Divisions. In addition, it also provides a summary and an
economic analysis of the receipts.

7. Demand for Grants and Appropriation: It shows the details of development and
non-development expenditures across all the ministries and divisions of the government.

8. Bangladesh Economic Review: The Bangladesh Economic Review mostly focuses on

trends of macroeconomic indicators, development policy, strategy and sectoral progress of
Bangladesh economy. 12
Budget Glossery
Allocation is money earmarked for a particular purpose in the budget (like education, health,
etc.).

Annual Financial Statement is a factual statement of receipts and expenditure for the financial
year, presented to the Parliament by the government.

Assets (Public) are things that the government owns or controls that are of value.

Audit is the assessment of the organization’s systems and procedures that aims at minimizing
errors, fraud, and inefficiency.

Balanced Budget occurs when the government’s total revenues equal its total expenditures for
a given fiscal year.

Balance of Payment is an accounting record of all monetary transactions between a country

and the rest of the world for a specific time period.

Government Budget is a statement of a Government’s estimated receipts and expenditure for

a particular period, normally a year. In Bangladesh the Government Budget is a statement of
estimated receipts and expenditures for one year starting each July as well as projected receipts
and expenditure for the following four years.

Budget Revision is a change in budgetary amounts (reduction and/or increase relative to the
budget plan adopted at the beginning of the calendar year). It occurs during the budget year,
when Budget revenue estimates are unrealistic, or when unexpected expenditures arise.

Deficit is the difference between budget expenditure and budget revenue.

Development Budget (or Annual Development Program) includes development activities

(investment projects, like water and sanitation, roads and bridges, electricity and
telecommunication) and is financed from both domestic and foreign sources.

Direct Tax is tax that is imposed directly on the taxpayer, i.e. that are paid by the taxpayer
directly into the budget, (for instance, tax on profits, income tax, tax on gifts and inheritances and
so on).

Expenditure is the funds disbursed from this account for government operations and the
purchase of non-financial assets.

Fiscal Policy is government actions with regards to aggregation of revenue and spending, and
the resulting surpluses or deficits.

Fiscal Year is the government’s 12-month accounting period. In Bangladesh it is from July to
June, which does not coincide with the calendar year.
13
Grants are funds that the national government disburses directly to lower levels of government,
corporations or other organizations, either for specific or for general purposes.

GDP is Gross Domestic Product is the market value of all officially recognized final goods and
services produced within a country in a given period (per year).

Indirect Tax is tax on goods and services that is collected indirectly, via an agent such as an
importer, producer or shop (for instance, VAT, excise, customs duty, turnover tax).

Medium Term Budget Framework is the five-year revenue and expenditure plans of the
national government.

Non-Development Budget is the part of the budget concerned with current realities
(maintenance of essential services, including public officials’ salaries, and social safety payments)
and financed from domestic resources.

Public Financial Management is the legal and administrative systems and procedures put in
place to permit government ministries, public agencies and local governments to conduct their
activities so that the use of public funds meets defined standards of probity, regularity, efficiency,
and effectiveness.

Program is a set of independent and closely connected activities and projects aimed at achieving
a common goal.

Project is a part of a program of a predefined duration, with planned expenses for the
achievement of the goals set by a program.

Public Sector is the part of the national economy that in the widest sense comprehends all levels
of government, the welfare system and public corporations.

Public Debt is the total indebtedness of the country to home or foreign creditors at a given
moment.

Revenue is the amount of money the state collects from public in a given period of time, including
taxes paid by citizens and businesses (typically, individual and corporate income taxes, payroll
taxes, value-added taxes, sales taxes, levies, and excise taxes).

Subsidies are non-repayable state aid to producers or consumers subject to a specific type of
business or behavior of the recipient.

Surplus is excess of revenue over expenditure in a given period.

Transparency (Budgetary or Fiscal) availability of comprehensive, accurate, timely, and useful

information on a government’s financial activities to public.

Value Added Tax is an indirect sales tax charged at every stage of production and distribution,
for all final parchases of goods and services. It is burdened on the final consumer of
godos/services, but the actual taxpayer to the budget is the provider of goods and services.
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