Budget Summery of Bangladesh

Chapter1

________________________________________

Introduction

1.1ORIGIN

This report is done for our honorable teacher Retd. Major Dr. Khondoker Saifuzzaman as requirement of completion of Managerial Economics Course (EW701) as a part of EMBA program in BUP during session of 2010-11.This was a group effort. The group consists of 4 members; they are Md. Mozzammel Huq Bhuiyan, Syed Adnan Parvez, Hossain Md. Abad and Shafi Samiur Raman.

1.2 PURPOSE:

* Fiscal policy and its importance.

* To have better picture on Fiscal Policy.

* To relate our study with the reality.

* Better understanding of Fiscal Policy of Bangladesh.

* The background of Bangladesh's Fiscal Policy.

* How Fiscal Policy works in our country.

These are the basic objectives of the study whereas many can take this study on any other purpose which is related to Fiscal Policy of Bangladesh or Macro-economy of Bangladesh.

1.3 SCOPE

The purpose of the report is to discuss about the fiscal policy taken By Bangladesh government in different time and its effect in countries economical condition. We discussed about the fiscal policy of Bangladesh from fiscal year 2006 up to 2011. This discussion includes the details of sources of fund like revenue, foreign funds, domestic borrowing and the sectors in which government used these funds. We tried to find out if these expenses brought any significant change in the related sectors by having more funds or receiving less funds.

1.4 LIMITATIONS:

The basic limitation of the study was time bindings and the volumes of the report ask itself. We had to shrink our report in many ways as said earlier this is a vast topic and we had to keep all inevitable things in a limited volume. Other than that we found things tough to collect some information which is not easily getable. Because of this we could only gather data from Fiscal year 2006 to 2011.Also the Taxation information in yearly basis was very difficult to acquire and we could not focus elaborately on this topic. Beyond all these we believe the best is done here as far as we are concern.

1.5 REPORT PREVIEW

We started our report with brief discussion on the National Budgets starting from Fiscal year 2006 up to fiscal year 2011. In these sections we discussed about the new proposed budget for the coming fiscal year and the revised budget for current fiscal year. We also mentioned the sources of funds by which government would meet up the deficit that is present every year. After that we platted some charts to compare the budgets of every year in respect to different sectors. Though these charts we tried to ascertain the usefulness of our fiscal policy in case of different sectors and overall results in our economy.

Chapter 2

________________________________________

Fiscal Year 2006-07

2. FISCAL YEAR 2006-07

2.1 NATIONAL BUDGET OF FISCAL YEAR 2006-07

The budget was proposed on 8th June 2006 by Safer Raman, finance minister of four party alliance governments. The budget was of Tk 69,740 crore for the fiscal year 2006-07 which had a big reliance on borrowing from banks, instead of foreign assistance, rising heavily to meet the financing gap.

Even after downsizing the revised budget of Fiscal year 2006-07 by more than Tk 3,000 crore, the bank borrowing marks a 35% rise due to drastic declines both in foreign loans and grants.

While a 12 per cent revenue growth on an average could be achieved over the last four years, a 17 per cent growth for the coming fiscal of 2006-07 was quite ambitious and especially so with more emphasis given to collection from income tax and VAT.

The government's overall expenditure was raised by 14 per cent in the new budget from the revised budget of FY2005-06, of which revenue expenditure had risen by 14.11 per cent and development expenditure by 21 per cent.

In the revised budget, the overall expenditure was cut by more than 5 per cent while revenue expenditure by around 3 per cent and development expenditure by more than 11 per cent.

2.2 BUDGET FOR FISCAL YEAR 2007

Total expenditure for the fiscal year 2007 was fixed at Tk 69,740 crore, which is Tk 8,642 crore more than that of the current revised budget. Of it, revenue expenditure was raised by 14.11 per cent to put it at Tk 42,286 crore.

The total development expenditure was raised by 20.47 per cent to put it at Tk 28,463 crore. Of it, non-ADP expenditure was increased by 45 per cent to make it Tk 1,982 crore. Again, ADP expenditure was raised by 21 per cent to make it Tk 26,000 crore.

Total revenue in the 2007 fiscal was raised by 17 per cent from the 2006 revised budget to make it Tk 52,542 crore. Of it, NBR portion was increased by 19 per cent to put it at Tk 41,055 crore. Again non-tax revenue was raised by 11 per cent to make it Tk 9,627 crore.

In NBR tax portion, highest emphasis was put on income tax, which was raised by 22 per cent while VAT was proposed to be raised by 18.80 per cent. Import tariff was increased by 15 per cent while supplementary tariff by 20.44 per cent in the coming fiscal compared to the current budget.

The overall deficit except grants was set at Tk 17,198 crore, which is 3.7 per cent of the GDP.

2.3 REVISED BUDGET FOR FISCAL YEAR 2006

Total expenditure for the revised 2006 budget was fixed at Tk 61,058 crore, which is 5 per cent less than that of the original budget. Of it, the revenue expenditure was reduced by 2.69 per cent to put it at Tk 37,057 crore.

Total development expenditure was reduced by 11 per cent to put it at Tk 23,626 crore. Of it, ADP expenditure was reduced