Bangladesh is set to see its 52nd budget as the Finance Minister is expected to place it in the national parliament next Thursday with an even bigger figure of outlay of Tk 7.5 trillion. The proposed annual public spending for the upcoming fiscal year will be around 10.60- percent higher than that of the current fiscal year. The growth rate of the budget spending is closer to the average rate for the last 15 years--14.50 per cent to be specific. Except for FY21 and FY22, when the country along with the rest of the world was battered by the Covid-19 pandemic, the annual increase in budget size was never below 10 per cent.
The growing size of the national budget is also consistent with the fast expansion of the economy which is reflected in the growth rate of the Gross Domestic Product (GDP). The annual average growth rate of GDP stood at 6.63 per cent in the last decade. Though there has been a declining trend in budget-GDP ratio since FY18, it is not a matter of big concern. The budget-GDP ratio was 18.40 per cent in FY18 which gradually came down to 17.50 per cent in FY22.
As a matter of fact, the actual implementation of the budget is more important than the size proposed originally. In the last decade, during FY10-FY21 to be exact, the average rate of implementation against the original or proposed outlay was 85.22 per cent. The rate was 89 per cent when the actual outlay is put against the revised one. An analysis of the budgetary trend also shows that when the size of the budget was relatively small, the rate of implementation was higher. For instance, in FY13, the rate of budget implementation against the original outlay of Tk 1.91 trillion was 91.10 per cent. In FY16 the rate came down to around 81 per cent when the size of the original outlay was more than doubled to Tk 2.95 trillion.
Lower rate of budget implementation has several implications. It indicates that the country's spending capacity is still not adequately strong and efficient. Due to less efficiency, there are misallocation, misuse and misappropriation of resources. Thus, whatever the actual spending is, a portion of the amount does not reach the target beneficiaries. Instead, a section of rent-seekers take advantage of the allocated funds. Thus, a big challenge for the policy makers is to ensure the optimal use of resources. Like in the previous years, a lot of expectations, recommendations and suggestions centring the FY24 budget are there. Debates and discussions on the upcoming budget are intensifying although it is presumed that the finance minister has already finalised the fiscal measures. There may be some changes or revisions after the placement of the budget in parliament.
Some also think that the forthcoming budget will be an election budget as the country's next general election is likely to take place by the end of the of this year or in the first month of the next year. To keep the voters happy, the incumbent may provide various sops through the budget, which is a common thing in the democratic countries of the global south.
In this connection, the core challenge for the finance minister is to check the upward trend in inflation which is hurting a large part of the population who belongs to limited-income group. In his FY23 budget speech, he set a target to keep the annual inflation rate within 5.60 per cent along with the expectation that GDP would register 7.50-percent growth. Due to external shocks originating from the Russia-Ukraine war as well as internal mismanagement, the government later revised downward the growth rate to 6.50 per cent and enhanced the inflation ceiling to 7.50 per cent. Provisional estimate of the national income, released by Bangladesh Bureau of Statistics (BBS), shows the GDP posting a modest 6.03-percent growth in the current fiscal year. Annual average rate of inflation, on the other hand, stood at 8.64 per cent in April this year.
Having election ahead, it is only natural that any democratic government will try hard to curb the inflationary pressure and give some relief to people. For an autocratic regime, it is different. It is, however, difficult to comprehend how the next budget will fight the inflation as public spending is set to increase further.
PRE-NOON BUDGET: In a different note, it is necessary to mention that over the years, there has been an urge from the journalists to unveil the budget in the morning instead of afternoon. Placing the budget in the afternoon through the finance minister's speech is a legacy of the colonial era. Though the British rulers left more than seven decades ago, like many other colonial systems and traditions, the schedule of budget announcement is still followed in the country. India has successfully come out of the tradition. The Indian budget is now announced at 11.00 in the morning. The federal budget in Pakistan is, however, placed at 5.00 pm fully maintaining the British legacy! Bangladesh also continues to place the budget in the afternoon, without any valid reason though.
If the finance minister announces the budget at 11.00 am or 11.30 am on Thursday, the journalists and analysts will get sufficient time to listen, read, comprehend and analyse the budget. Currently, they have to come under tremendous pressure due to having limited hours in hand. So, there is a wide scope of committing mistakes and it becomes impossible to decode all the necessary budgetary jargons. Nevertheless, no step has been taken so far to shake off the colonial legacy and make a pre-noon announcement of the budget to make it more transparent.
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