Fiscal Policy of
Bangladesh

Jamshed uz Zaman

When budget is declared
Opposition Parties claim: Budget against the poor;
Government Parties claim: Welfare oriented budget.
Some declares hartal.

How to understand a budget favors whom?
A budget may favor
• poor or rich class;
• Importers or exporters;
• Primary producers or manufacturers; etc.
Government claims that the budget is surplus, but most often it is true. Govt.’s claim it because
• Political popularity,
• People are afraid of inflation.

Is deficit budget always unacceptable? No. Deficit budget are prepared

• In deflationary situation,
• When resources fall short of needs,
• To help implementation of monetary policy. Deficit does not necessarily mean imposition of new taxes.

Components of Budget
Revenue Budget

•
•

Revenue Receipts
Revenue Expenditure
Surplus/Deficit

Food Budget
• Food Aid
• Counterpart Fund
• Food Import
• VGD, FFW
• Subsidy
Surplus/Deficit

Capital Budget
• Receipts
• Payments
Surplus/Deficit

Development Program
+
-

•
•

Expenditure
Receipts

•
•
•
•

Revenue Surplus
New Tax Measures
Net Domestic Capital
Extra Budgetary Resource

•
•

Counterpart fund
Net food aid

•
•
•
•

Foreign Assistance
Foreign Direct Investment
Borrowing from the public
Borrowing from Banking
System
- Central Bank
- Commercial banks

Total Budget has to be deficit to achieve the long term goals
We have to check whether the budget is inflationary, • ADP ► if helps productivity ► no inflation.
• ADP ► if does not helps productivity ► inflation.
We have check dependence on foreign assistance • Is increasing or not
Whether there is long term goals
• Anti terrorism
• Anti drug abuse
• Law and order situation improvement
• Socio-economic development.

Tax/Revenue Ratio has to be increased to