Finance ministry approves new rule on public assets, budget
Shakhawat Hossain | Sunday, 20 July 2008
The finance ministry has approved a new regulation on public assets and budget that aims at keeping bank borrowings within 3.0 per cent of the country's gross domestic product (GDP), said the ministry officials.
The regulation, first of its kind, has been named as the 'government properties and budget management ordinance 2008'.
Prepared on the basis of suggestions made by major donors and multilateral agencies the ordinance will now be sent to the advisory council for approval, said a senior finance ministry official.
The International Monetary Fund (IMF) in its pre-budget opinion praised the caretaker government's move to finalise the regulation saying it would help keep the budgetary expenses under control.
If approved, the ordinance will help keep government bank borrowing within 3.0 per cent of the GDP, said the official.
The official said the new regulation, however, has not put any restriction on government seeking loans from donor and multilateral agencies.
The government dependency on local bank borrowing has grown in recent years to tide over the widening budget deficit in the event of poor inflow of foreign aid.
In just concluded 2007-08 fiscal, budget deficit reached 4.8 per cent of the GDP from projected 4.2 per cent.
The widening budget deficit forced the government to raise bank borrowing by 43 per cent to Tk 103.98 billion from projected Tk 72.53 billion in the year.
However, the government could manage to get enhanced amount of foreign loans, which was 23 per cent higher from the projected Tk 63.05 billion in the 2007-08.
Among other things, the new regulation will make it mandatory for the government to keep aside 6.5 per cent of the GDP in the budget for the purpose of poverty alleviation.
Besides, the ordinance will restrict the government capacity to keep the contingent liabilities within 1.0 per cent of the GDP.
Contingent liabilities relate to future liabilities that include guarantees and the outcome of legal disputes, said another finance ministry official.
The IMF has already suggested the finance ministry not to give government guarantee in Bangladesh Biman's bid to procure aircraft from Boeing company on credit.
Such guarantee, according to the IMF, will raise the government contingent liabilities substantially.
The official said the ordinance also seeks to set a new guideline for the loss- making state-owned enterprises (SoEs). The new guideline will force different ministries to establish further transparency in running their activities.
The country's 44 SoEs under different ministries and divisions have been projected to have incurred losses around Tk 52.76 in 2007-08, which is almost double of that in last fiscal.
The regulation, first of its kind, has been named as the 'government properties and budget management ordinance 2008'.
Prepared on the basis of suggestions made by major donors and multilateral agencies the ordinance will now be sent to the advisory council for approval, said a senior finance ministry official.
The International Monetary Fund (IMF) in its pre-budget opinion praised the caretaker government's move to finalise the regulation saying it would help keep the budgetary expenses under control.
If approved, the ordinance will help keep government bank borrowing within 3.0 per cent of the GDP, said the official.
The official said the new regulation, however, has not put any restriction on government seeking loans from donor and multilateral agencies.
The government dependency on local bank borrowing has grown in recent years to tide over the widening budget deficit in the event of poor inflow of foreign aid.
In just concluded 2007-08 fiscal, budget deficit reached 4.8 per cent of the GDP from projected 4.2 per cent.
The widening budget deficit forced the government to raise bank borrowing by 43 per cent to Tk 103.98 billion from projected Tk 72.53 billion in the year.
However, the government could manage to get enhanced amount of foreign loans, which was 23 per cent higher from the projected Tk 63.05 billion in the 2007-08.
Among other things, the new regulation will make it mandatory for the government to keep aside 6.5 per cent of the GDP in the budget for the purpose of poverty alleviation.
Besides, the ordinance will restrict the government capacity to keep the contingent liabilities within 1.0 per cent of the GDP.
Contingent liabilities relate to future liabilities that include guarantees and the outcome of legal disputes, said another finance ministry official.
The IMF has already suggested the finance ministry not to give government guarantee in Bangladesh Biman's bid to procure aircraft from Boeing company on credit.
Such guarantee, according to the IMF, will raise the government contingent liabilities substantially.
The official said the ordinance also seeks to set a new guideline for the loss- making state-owned enterprises (SoEs). The new guideline will force different ministries to establish further transparency in running their activities.
The country's 44 SoEs under different ministries and divisions have been projected to have incurred losses around Tk 52.76 in 2007-08, which is almost double of that in last fiscal.