Budget, Government the forethought and specifications of the government's incomes and expenditures for a financial year, in Bangladesh beginning from July 1 and ending on June 30 of the calendar year. Government budget contains the strategies for mobilisation, allocation and disbursement of public money by means of fiscal and monetary operations with due consideration of political, economic, and bureaucratic decision-making process. It developed in Bangladesh on the basis of legal requirements, economy's management needs, conventions, functional conveniences as well as accounting and auditing requirements, including transparency and accountability.
The Constitution of Bangladesh, however, does not use the term 'budget'. Instead, it uses an equivalent term 'Annual Financial Statement', which is to show the estimated receipts and expenditures of the government for a particular financial year. Government budget in the country has two parts: Revenue and Development. The former is concerned with current revenues and expenditures, concerning maintenance of normal priority and essential services, while the latter is prepared for development activities. Formulation of the two budgets follows different procedures. Their financing pattern and the delegated authorities of incurring expenditure in different tiers in them are also different. Receipts in revenue budget are: domestic receipts (tax and non-tax); foreign grants; capital receipts (foreign loans); domestic capital (net of current receipts and expenditures in public accounts); extra-budgetary resources (debenture of autonomous bodies, their self-financing and accumulated balance, and materials at stock); and domestic loans and advances (net).
Receipts in development budget are grouped as public and private receipts. Public receipts are the revenue surplus (revenue receipts minus revenue expenditures), incomes through new measures (such as new taxes), net domestic capital, and extra budgetary resources. A special form of public receipts is the foreign aid (project aid, counterpart fund from commodity aid and net food aid). Receipts under the private head for development budget are generated through direct private investment, borrowing from banking system and foreign private investment. Revenue budget is prepared by the Finance Division and the agency to prepare the development budget is the Planning Commission.
Preparation of the revenue budget is a multi-stage process implemented within a time schedule. The first stage is the printing of departmental estimates, which is followed by printing and distribution of Budget Forms (Estimating Officer's forms) for supply to the accounts officers concerned, who fill them up with estimates from all controlling offices and send consolidated estimates to the ministry of finance. The ministry of finance then examines the estimates, receives schedule of new expenditures and information on actual expenditures of agencies and organisations in last six months, reviews new estimates on the basis of these information, and prepares a rough edition of the budget and the schedule of new expenditures. The ministry also collects forecasts of foreign development assistance and development programmes from ministry of planning and after making necessary adjustments, prepares the budget documents for presentation in the jatiya sangsad (Parliament) for discussion and approval.
Development budget of the government of Bangladesh is a result of a continuous process of identifying new projects, review of project concept papers (PCPs), and vetting of the projects in ministries and in the Executive Committee of the National Economic Council (ECNEC). Usually by December, the Economic Relations Division (ERD) prepares aid memorandum, circulates it to the ministries for their comments, and based on domestic resource projections by national board of revenue and the Internal Resources Division, the ERD revises the aid memorandum. The document is then sent to the Cabinet for approval. Resource position for revenue expenditure and budget is then estimated and the Programming Committee finalises eligible projects for inclusion the annual development programme (ADP). In fact, ADP is the development budget, which, like the revenue budget requires approval of the parliament.
Two constituent parts of the government budget are the consolidated funds (Fund) and the public accounts (Account). These are not separate entities but are distinguished by differences in receipts and disbursements. The transactions in both heads represent inflows and outflows of funds from a single corpus known as the 'exchequer'. The overall balance of the budget, its surplus or deficit, is represented by the difference between total receipts and expenditures of the Fund and Account together.
Consolidated Fund includes all receipts of the government, all loans and grants received from domestic and foreign sources and the recoveries of loans and interest thereon. All disbursements for both revenue and development heads are made from the Fund. A part of revenue expenditure is known as 'Charged Expenditure', which may be discussed in the parliament but voting is not required. Receipts in Public Accounts of the Republic represent the part of the exchequer, which do not constitute the Consolidated Fund. These relate mostly to transactions, in respect of which the government acts as custodian or banker in trust. These receipts include provident funds of government employees, post office savings deposits, various deposit accounts (local funds, judicial deposits, foreign aid deposits etc.), and adjusting heads like suspense and remittances. Some of these transactions are only book transfers. The expenditures comprise disbursements, which are set off against receipts and the difference between receipts and expenditures represents a net accretion or depletion to cash resources.
Various departments, directorates, and ministries submit their estimated funding requirements in the form of demand for grants. Demands for each service is shown under the head issued by C&AG (comptroller and auditor general). No change in the heads of account can be effected without his approval. No demand for grant can be introduced in the parliament without prior approval of the President. Article of 92(b) of the Constitution has a provision for making a demand for grant titled 'Unexpected Expenditure'. It is a separate grant shown as lump. There is an elaborate procedure as to how the money should be drawn. The money drawn from this account has to be incorporated in revised budget/supplementary budget. Re-appropriation of funds are effected following the delegation of authority orders which defined the extent to which and on what items re-appropriation of funds can be made by office heads, departmental heads and ministries and divisions.
Stages of budget procedure in Bangladesh are preparation, approval, implementation, and follow-up. Policy components of the budget are: (a) fiscal measures or revenue policy; (b) expenditure proposed for basic functions of the government, ie, revenue or current expenditure; (c) development or public investment, ie, ADP; (d) money budget, commonly called credit and liquidity programme; and (e) authorisation for implementation of these policies.
Revenue budget follows the traditional process of incremental budgeting. Estimates are adopted on the basis of preceding year's expenditures and their historical trend. Development budget is related to long-term investment within the framework of a long-term plan like Five-Year Plan (FYP), mostly in activities of building infrastructures and additional facilities for production and services. Unlike revenue budget, development budget allocations are made on the basis of annual allocations shown in each project documents and the resources realities. New and on-going projects get the full allocations as shown in the Project Proforma (PP).
Finance division, ministry of finance is responsible for finalising the budget documents encompassing all stages from collection, examination of ministerial submission and passage through parliament to final publication of it. Budget and development wings of finance division take care of revenue and development budgets respectively while the internal resources division prepares the taxation proposals.
The finance minister places the budget before parliament in June. It accompanies an introductory speech known as budget speech consisting of two parts. Part one deals with the overall financial and economic conditions prevailing in the country and government's economic performance during the last one year and also government's economic plans and programmes and the budgetary allocation. Part two deals with taxation measures. After budget discussions, money bills, supplementary bill, and appropriation bill are placed before the parliament. If, for any reason, it is not possible to pass the appropriation bill within 30 June, a vote on account of the bill has to be placed before the parliament. Usually, through this bill an amount equivalent to two months expenditure is sanctioned.
Implementation of the approved budget is carried out through various rules and orders embodied in General Financial Rules (GFR), Treasury Rules (TR) and the Delegation of Financial Orders issued by the finance division of ministry of finance. Authorisations embodied in the Appropriation Act constitute the outer framework of a control, while expenditure sanction and disbursement by executive authority at various levels follows a given pattern of delegated financial powers.
Budget implementation also involves balancing of government incomes and expenditures. Measures for realisation of income and its quantum and the direction of expenditure affect the economic life of corporate bodies, individuals and households of different income groups differently during the budget year.
Financial control is closely related to accountability and a control is exercised in order to ensure that the disbursements do not exceed the amount provided for in the budget estimates, the expenditures are made for the purposes specified, and financial propriety is ensured. The C&AG works as the watchdog in this respect. He prescribes the form and manner of keeping the accounts of the Republic. He ensures account compilation and timely auditing, prepares reports, and places them to the President who causes them to be laid before the parliament. This is an annual feature and this calls for compilation of two types of accounts: Finance Accounts, and Appropriation Accounts
Finance Accounts, sometimes called Annual Accounts of the government, is compiled by controller general of accounts (CGA). It incorporates comprehensive accounts of receipts and expenditures of the government. It classifies transactions under respective heads pertaining to all approved heads of government accounts and is kept in two parts. Part one comprises the accounts of total receipts and expenditures, the resultant revenue surpluses or deficits, the capital expenditures, including transactions related to temporary and permanent debts, deposit transactions, and money adjustments. Part two exhibits accounts of debts, deposit transactions, and money remittances. The accounts commence with a certificate of the C&AG that represents and authenticates CGA's reports and accounts.
Appropriation Accounts separately indicates 'charged expenditure' and 'other than charged expenditure' for each budget grant. This is sent to the controlling offices exhibiting budgetary provisions and expenditure thereof and their variation, if any, for their comments. On receipt of the comments of the controlling officers, CGA prepares the accounts. The rendering of audit reports on both accounts is the responsibility of C&AG and it serves the purpose of direction in which rules and governments orders are followed by the disbursing authorities.
Bangladesh followed the financial management system that existed in British India adopted in Pakistan. After the provincial autonomy was allowed in 1935, there had been two sets of financial rules: General Financial Rules (GFR-1922) meant for Central Government and the Bengal Financial Rules (BFR-1937). In 1998, New BFR was issued adjusting the overlaps and duplication of GFR-1922 and BFR-1937.
In 1990, a Committee on Reforms in Budgeting and Expenditure Control (CORBEC) was established and on the basis of its recommendations, a programme named Reforms in Budget and Expenditure Control (RIBEC) was carried out. RIBEC felt that changes in budget format, reduction of budget cycle and identification of flows of funds between government and autonomous bodies are related to classification necessary for budgeting, accounting, expenditure control, and analysis. computer oriented classification has been evolved and put to practice during financial year 1997-98 and this is based on code groups, such as legal codes, functional codes, and economic codes.'
The parliamentary control of budget is ensured by standing committees in respect of financial matters of the government. These committees are (a) Committee on Public Accounts (CPA); (b) Committee on Estimates (CE); and (c) Committee on Public Undertakings (CPU). The terms of references are laid down in the Rules (Rule No. 223- CPA, Rules Nos. 235 and 237 CE and Rules Nos. 238 and 239 CPU). [Motahar Hussain]