Prime macroeconomic targetsThe policy of the Government is to enhance public expenditure in the next five years and to this end domestic resource mobilization has to be scaled up. Over the past 5 years, revenue collection has increased from 10.7 percent to 13.3 percent of GDP. At the same time, the size of public spending has increased from 15.7 percent to 18.3 percent of GDP. The target over the next 5-years would be to augment resource mobilization to 17 percent and increase the size of the budget to 22 percent of GDP. Side by side, the core objective of the Government is to transform Bangladesh into a middle-income country by 2021 through structural and other reforms, especially in the areas of strengthening local government, land management, institutional development and good governance.
Major growth assumptions
Table 1: A Glance of Recent Performance of Bangladesh Economy, Source: BBS, Bangladesh Bank and Finance Division, Data from 2009-10 to 2012-13 (1995-96 base year)
Based on policy assumptions, popular expectations, and rational analyses the Government has set the GDP target at 7.3 percent for FY 2014-15. Considering the recent global economic trend as well as domestic economic scenario the Government remains hopeful regarding growth. The general hope is that in the next fiscal, investment, export and remittance flows will increase as it is expected that the global economy will experience accelerated growth. Finance Minister assumes that during this period, food and energy prices in the international market are likely to decline slightly. Besides, an investment-friendly monetary policy will be maintained ensuring uninterrupted credit flows to the productive sectors. Government initiatives for developing physical infrastructure in the power, energy and communication sectors will continue. Different initiatives will be undertaken for the development of skills and human resources. Fiscal, monetary and stock market reforms will go on. Foreign investment and assistance are expected to increase. Credit and input support will continue in the broad agriculture sector. Above all, the basic expectation is favorable weather and political stability.
According to the budget speech of Finance Minister, the revenue receipts for FY 2014-15 has been estimated at Tk. 1 lakh 82 thousand 954 crore which is 13.7 percent of GDP, of which NBR tax revenue is Tk. 1 lakh 49 thousand 720 crore (11.2 percent of GDP). Revenue from Non-NBR sources has been estimated at Tk. 5 thousand 572 crore (0.4 percent of GDP). In addition, Tk. 27 thousand 662 crore (2.1 percent of GDP) will be collected as Non Tax Revenue (NTR).
The total expenditure for FY 2014-15 has been estimated at Tk. 2 lakh 50 thousand 506 crore (18.7 percent of GDP). The allocation for non-development and other expenditure has been estimated at Tk. 1 lakh 70 thousand 191 crore (12.7 percent of GDP). Expenditure for ADP has been estimated at Tk. 80 thousand 315 crore (6 percent of GDP).
The overall budget deficit will beTk. 67 thousand 552 crore, which is 5 percent of GDP. Of this amount, Tk. 24 thousand 275 crore (1.8 percent of GDP) will be financed from external sources and Tk.43 thousand 277 crore (3.2 percent of GDP) from domestic sources. Of the domestic financing, Tk. 31 thousand 221 crore(2.3 percent of GDP) will come from the banking system and Tk. 12thousand 56 crore (0.9 percent of GDP) from savings certificates and othernon-banking sources.
Key development expected Inflation checkedFinance Minister is targeting that the general inflation in Bangladesh will be hovering around 7.0 percent by June 2014 and will reduce further at the end of the next fiscal year. If Concretionary monetary (and fiscal) policies taken this estimated inflation rate would minimize the sufferings of mass consumers.
Table 2: Recent inflation behavior in Bangladesh, Source: Tradingeconomics.com, Data from Bangladesh Bureau of Satistics
Flowing of money and credit to agriculture and enterprisesThe Budget is seeking to ensure uninterrupted credit flows to the agriculture sector, and small and medium enterprises together with other important sectors. It becomes clear by observing the recent economic trends of the country that the monetary policies are supported by liberalization, privatization, and other macroeconomic reforms in order to create a more open, a more comprehensive and competitive economy driven by the both private and state agencies. Unremitting credit flows to the agriculture sector, and small and medium enterprises would definitely accelerate the momentum of our economic growth.
Import and export balanceDue to the recent positive trend in the global economy the Government expects that import and export growth will accelerate and the export earnings and import expenditure may increase by approximately 15 percent.
Annual Development Programme (ADP)Bangladesh’s Annual Development Program (ADP) had been moving ahead slowly due to lack of coordination and proper policy guidelines. But from last few fiscal years ADP policies and implementation strategies are proving productive.
This FY 2014-2015 the government laid emphasis on overall development of the country rather than tackling the on rush of demand of an election year. In the ADP for FY 2014-15, human resource sector (education, health, and other related sectors) will receive 24.3 percent, overall agricultural sector (agriculture, rural development and rural institutions, water resources and other related sectors) 25.8 percent, power and energy sector 14.3 percent, communication (road, railway, bridges, and other related sectors) 23.3 percent and other sectors 12.25 percent of total allocation. This sector wise ADP distribution might prove fruitful to attain Millennium Development Goal (MDGs) by 2015. Our economic indicators would go upward if the allocations properly translate into distribution.
For a detail perspective of the sector wise budget allocations, please click here
During last five years continued performance of the different sectors of the economy have lead to attainment of GDP growth above 6% per annum. Over time, there has been structural transformation of the economy with a shift from predominantly agriculture based economy towards an industry led and service oriented economy. It can be anticipated that this budget for FY 2014-2015 would definitely carry out the momentum and lead the economy to its desired growth.
– Budget Speech of Finance Minister for FY 2014-2015
– Official website of Ministry of Finance (http://www.mof.gov.bd/en/)