18-08-2012, 12:04 PM
Information Kit on the Budget of Bangladesh
Information Kit on the Budget of Bangladesh.pdf (Size: 1.18 MB / Downloads: 91)
Introduction
Government Budgets contain the strategies for mobilisation, allocation and disbursement of public money by means of fiscal and monetary operations with due consideration of political, economic, and bureaucratic decision-making process. Constitutionally, Bangladesh uses the term 'Annual Financial Statement', which shows the estimated receipts and expenditures of the government for a particular financial year. In accordance with the Constitutional provisions in the country, the budget is divided into Consolidated Fund (CF) and Public Account (PA) of the Republic.
Consolidated Fund includes all receipts of the government, all loans and grants received from domestic and foreign sources and the recoveries of loans and interest thereon. All disbursements for both revenue and development heads are made from the CF. On the other hand, receipts in PA represent that part of the exchequer, which do not constitute the Consolidated Fund. These relate mostly to transactions, in 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.),and adjusting heads like suspense and remittances.
The Consolidated Funds and the Public Accounts are not in practicality separate entities but are distinguished by differences in receipts and disbursements. The transactions in both heads represent inflows and outflows of funds from a single corpus known as the 'exchequer'. The overall balance of the budget, its surplus or deficit, is represented by the difference between total receipts and expenditures of the CF and the PA together.
Structure of Bangladesh Budget
The Government Budget in the country has two parts: Revenue and Development. The former is concerned with current revenues and expenditures i.e., maintenance
of normal priority and essential services, while the latter is prepared for development activities. Formulation of the two budgets follows different procedures. Their financing pattern and the delegated authorities of incurring expenditure in different tiers in them are also different.
Development Budget
Development budget of the government of Bangladesh is a result of a continuous process of identifying new projects, review of project concept papers (PCPs), and vetting of the projects in ministries and in the Executive Committee of the National Economic Council (ECNEC). Usually by December, the Economic Relations Division (ERD) prepares aid memorandum, circulates it to the ministries for their comments, and based on domestic resource projections by National Board of Revenue (NBR) and the Internal Resources Division, the ERD revises the aid memorandum. The document is then sent to the Cabinet for approval. Resource position for revenue expenditure and budget is then estimated and the Programming Committee finalizes eligible projects for inclusion the Annual development Programme (ADP). In fact, ADP is the development budget, which, like the revenue budget, requires approval of the parliament.
Some Characteristics of Budget in Bangladesh
It is effective during a financial year starting from July 1 and ending on June 30, next year
Budget is divided into Revenue Budget, Capital Budget and Development Budget;
The government budgeting is done on a cash basis. Both receipts and expenditures are shown in cash terms;
Foreign loans are reflected on a gross receipt basis showing total disbursement;
Budget is prepared on incremental basis, on the basis of upward adjustment of expenditure as against performance budgeting;
Budget Document Consists of:
Budget Speech
Budget in Brief
Annual Financial Statement
Gender Budget Statement
Consolidated Fund Receipts
Demand for Grants and Appropriations
The Annual Plan is a short-term operational plan within the framework of which the Annual Development Programmes (ADP) is drawn. Thus Annual Plan provides the necessary link between the Five-Year Plan and the objective situation obtaining in the economy of the country. The ADP is an integral part of the annual budget. It provides the linkages between the ‘annual plan’ prepared by the planning commission and the ‘annual budget’ prepared by the Ministry of Finance.
Receipts in Bangladesh Budget:
Receipts in revenue budget consists of domestic receipts (tax and non-tax); foreign grants; capital receipts (foreign loans); domestic capital (net of current receipts and expenditures in public accounts); extra-budgetary resources (debenture of autonomous bodies, their self-financing and accumulated balance, and materials at stock); and domestic loans and advances (net).
Receipts in development budget are grouped as public and private receipts. Public receipts are the revenue surplus from revenue budget (revenue receipts minus revenue expenditures), incomes through new measures (such as new taxes), net domestic capital, and extra budgetary resources. A special form of public receipts is the foreign aid (project aid, counterpart fund from commodity aid and net food aid). Receipts under the private head for development budget are generated through direct private investment, borrowing from banking system and foreign private investment.
Budget Cycle
The budget is technically the document that includes the government's expenditure and revenue proposals, reflecting its policy priorities and fiscal targets. However, the budget document is the culmination of an on-going budget decision-making process, and of a country's system for managing and assessing its spending and tax policies. Looking at any one aspect of the overall budget system in isolation misses the important interaction between the various parts. Therefore, a discussion on the budget cycle is imperative.