Perspective view of national budget

It is perhaps possible in digital imagination to extrapolate an astronomical projection for the annual national budget.  But if it is not taken into consideration with the total real value of goods and services of national produce, such extrapolation will cause several detrimental consequences that may jeopardise the sustainability of national economic development and national social bonding will fall apart.
First of all, it will cause inflation not connected with the dynamics of the market. It will cause a false veneer of success which under any rigour will disappear and a cycle of recession will set in. It will force the government to print more money and borrow from the market. Investment in production and job creation will dry out. Banks will have liquidity but no one to lend to and ideas of unwarranted siphoning of capital will be encouraged.
Such an attempt may not be done for unrealistic reasons, but by deliberate design to serve either vested interests or for political gain or both.   While the economy depends on individual and collective social behaviour,  management of fundamentals of the economy is precisely defined, as in pure sciences.
 It is a fact that every country eternally strives to achieve high employment, high growth and low inflation. Yet very few succeed in striking a balance between micro and macroeconomic objectives. Hence, the question is: "Why are some countries poor, why some are rich? Or, why do some countries grow faster than others?" The answers to these questions are not far to seek. The balance between microeconomic objectives - efficiency and equity and macroeconomic objectives - price stability, full employment and growth often remain a distant dream. Thus, the concept of budget deficit has become a major social and political issue. The policy-makers of the developing countries like Bangladesh should be very careful in formulation of the policies while preparing the budget.
Three fundamental tenets are taken into consideration during preparation of the national budget. The first is the macroeconomic context within which the budget is formulated and this includes the internal and external equilibriae and also past, present and future macroeconomic projections and trajectories. The second is the interface of the budget to the medium to long-term development priorities, in this case, the Bangladesh Growth and Development Strategy, the Vision 2022.
Lastly, the balance between Recurrent and Development Budget Expenditures in the national budget is another important aspect during budget formulation. All the three are explicitly linked within the Medium Term Expenditure Framework (MTEF).
One of the most important focuses in the budget should be on revenue earning. Revenue contributors are not only paying to run the government, they are putting their confidence in the management of both political and economic aspects of the government. If revenue is collected coercively, it will lack confidence of the contributors and tyranny will take over the management of the government. In a democratic nation, every citizen has the inalienable right to contribute to the running of the government as much as to all efforts of growth. Political leadership and bureaucracy, particularly in a decolonised state unwittingly separate the government from the citizens that is reflected routinely in the budget, in its form, projections and in prescribing regime of control and subservience. This is because of the legacy of the colonial control and discrimination by the upstarts.  
During budget preparation, trade-offs and prioritisation among programmes must be made to ensure that the budget fits the government policies and priorities. Next, the most cost-effective variants must be selected. Finally, means of increasing operational efficiency of the government must be sought. None of these can be accomplished unless financial constraints are built into the process from the very start. Accordingly, the budget formulation process has four major dimensions:
l Setting up the fiscal targets and the level of expenditures compatible with these targets. This is the objective of preparing the macro-economic framework,
l Formulating expenditure policies,
l Allocating resources in conformity with both policies and fiscal targets. This is the main objective of the core processes of budget preparation, and
l Addressing operational efficiency and performance issues.
Although in almost all countries government budgets are prepared on an annual cycle, to be formulated well they must take into account events outside the annual cycle, in particular the macroeconomic realities, the expected revenues, the longer-term costs of programmes, and government policies. Wildavsky sums up the arguments against isolated annual budgeting as follows: "short-sightedness, because only the next year's expenditures are reviewed; overspending, because huge disbursements in future years are hidden; conservatism, because incremental changes do not open up large future vistas; and parochialism, because programs tend to be viewed in isolation rather than in comparison to their future costs in relation to expected revenue".
There is a growing consensus that public expenditure management is a political, rather than a simply technocratic, process. Studying the politics of the budget process essentially means examining the ways in which the distribution of power within that process affects the subsequent distribution of public resources. From a social theory perspective, this has two key dimensions - power as formal structures and power as the informal incorporation of dominant norms and values into operating procedures and practice. In any given process of budget formulation and execution, unequal power relations may be expressed by: inclusion/exclusion or proximity by different social groups to the decision-making process; norms and values explicitly expressed in the statement of purpose and implicitly embedded in the priorities and assumptions contained within the process, structure and content of the budget. Power also plays a significant role in the legitimating of knowledge, and in determining who has access to information which guides decision-making.
The transparency of the system of budget management is critically important. Transparency takes many forms, but in all its forms are founded on a system of budget information that allows for both officials and the public to scrutinise what actually happens to the money. When such information is available, and publicly disseminated, it can act as the 'nourishment' on which a culture of greater accountability can develop - often in ways that cannot be planned or predicted in advance.
Significantly, political budget is seen to be primarily a phenomenon of the first election after the transition to a democratic electoral system. More specifically, the term most often refers to increases in government spending or the deficit or decreases in taxes (including changes relative to long-term trends) in an election year which are perceived as motivated by the incumbent's desire for re-election for himself or his party. This affects adversely the formulation of both monetary and fiscal policies as guiding principles and functioning of market are not always commensurate with narrow political ambition of one single leader or party. Particularly, in Bangladesh, both economy and growth suffered from this dichotomy ever since its emergence as an independent nation.
Fundamentally, politicians of all colours need to respect the autonomy of citizens and effectively free them from the straight -jackets of bureaucratic regime and allow them to freely and creatively exercise their economic rights and thus create wealth for the nation. The government can not do any business, nor can the bureaucracy, unless to cause corruption. Revenue contribution by the citizens is the only linkage in governance and transparency is essential to sustain this linkage. Annual national budget is a covenant for transparency and an evidence of performance by the government of managing the trust and wealth of the nation.    
The International Monetary Fund has backed economists who argue that inequality is a drag on growth in a discussion paper that has also dismissed rightwing theories that efforts to redistribute incomes are self-defeating. The Washington-based organisation, which advises governments on sustainable growth, said countries with high levels of inequality suffered lower growth than those that distributed incomes more evenly.
Backing analysis by the Keynesian economist and Nobel prizewinner Professor Joseph Stiglitz, it warned that inequality can also make growth more volatile and create unstable conditions for a sudden slowdown in GDP growth. In a nutshell, a divided and polarised nation will only experience short- term economic success but surely fall into periodical cycle of recession, depression and despondency which in political terms will cause chaos and disorder in successive political cycle.
The writer is an economist and President of Bangladesh Myanmar Chamber of Commerce & Industry (BMCCI).
     kbahmed1@gmail.com