budget (English).ppt

7/28/2019 budget (English).ppt

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Government

Budgeting inBangladesh


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Constitutional and Legislative

Aspects of the Budget

The article 87 of the constitution requiresthat, a statement of the estimated receipts

and expenditure of the government inrespect of each financial year shall have tobe laid before the Parliament.

This statement is called Annual FinancialStatement and This is the name given tothe budget in the Constitution ofBangladesh.


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Structure of the National Budget

T a x N o n - t a x

R e v e n u e s G r a n t s L o a n s

R e c e i p t s

C h a r g e d

E x p e n d i t u r e

O t h e r


R e v e n u e A c c o u n t

C h a r g e d


O t h e r


D o m e s t i c c a p i t a l A c c o u n t

N o n - D e v e l o p m e n t

R e v e n u e E x p e n d i t u r e C a p i t a l E x p e n d i t u r e

D e v e l o p m e n t

E x p e n d i t u r e s

C o n s o l i d a t e d F u n d

R e c e i p t s P a y m e n t

P u b l i c A c c o u n t o f t h e R e p u b l i c

A n n u a l F i n a n c i a l S t a t e m e n t /

T h e B u d g e t


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Consolidated Fund

According to the article 84 of the Constitution

all receipts of the government on account of

taxes, income from assets, borrowing,repayments of loan, etc. are credited to a

single fund called the Consolidated Fund.

No money can be withdrawn from the

Consolidated Fund except on the basis ofthe expenditure approved by the parliament.


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Public Account of the Republic

All other money received by any

government official and not credited to the

Consolidated Fund has to be credited tothe Public Accounts of the Republic.

The government holds this receipts in a

trusteeship.


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Government Receipts

Major sources of government receipts inBangladesh are as follows:

Revenues

-Tax Revenue

-Non-Tax Revenue Grants Loans

-Domestic Debt

-Borrowing from Banking System

-Non-Bank Borrowing-External Debt


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Government Expenditure

The expenditure budget of Bangladeshis divided into following two categories:

Non-Development-revenue expenditure

-capital expenditure

Development-revenue expenditure

-capital expenditure


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Charged and Other Expenditure

The annual financial statement shows separately

the sums charged on the Consolidated Fund;

and other expenditures. The parliament can discuss on the estimates of

charged expenditures, but they are not subject to

vote; Other expenditures require to be submitted as

demand for grants and are subject to vote.


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Coverage of the Budget

The government budget in Bangladesh includes

both revenue and expenditure of the

government;

The budget covers all government departments/

directorates/field offices and includes all

financial transactions of the government.

The central government budget does not includefinancial transactions of local governments or

state owned enterprises.


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List of Reading

Goode, Richard (1984), Government Finance in Developing

Countries, Brooking Institution, Washington.

Managing Government Expenditure, ADB, 1999.

Jones, R. and Pendlebury, M. (1996), Public SectorAccounting, Pitman Publishing, London.

Fiscal Policy for Stabilization and Adjustment in World

Development Report 1988, Oxford University Press, 1988.

Guidelines for Fiscal Adjustment, IMF,1995

Ministry of Finance, Government of the Peoples Republic of

Bangladesh (2004), Budget in Brief,


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What is Government

Budgeting?

A government budget is a statement of a

governments estimated receipts and

expenditure for a particular period, normally ayear.

The budget brings all the governments tax and

spending plans together.

Financial reflection of government activities orwhat the government plans to do.

P f G t


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Purposes of Government

Budgeting

Ideally a budget serves four mainpurpose:

First, it is a means of policy formulation. Second, it works as an instrument of

policy implementation; Third, the budget is an instrument of

legal control; and the budget documents are a source of

information on government decisions

and activities.


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Comprehensiveness of Budgeting

A government budget should cover all

government departments/agencies;

A national government budget should notinclude financial transactions of local

governments or state enterprises;

But it should include grants or loans to the local

governments, capital subscriptions, loans and

subsidies to state enterprises and any

dividends, interest and loan repayment from

them to the government


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Different Systems of Government

Budgeting

Traditional Line Item Budgeting

Performance Budgeting

Planning, Programming, Budgeting

System (PPBS).

Zero-Base Budgeting (ZBB)

Medium Term Budgeting


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the budget is prepared on a line item

basis;

the preceding years income andexpenditure are accepted as the standard

for the next years budget.

it becomes impossible to measure theperformance or activities of a department;


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Traditional budgeting does not require policy

analysis.

its incremental approach fails to consider

whether a particular item is still required or

the amount currently incurred is reasonable.

Once an item appears in the budget its

inclusion in future budget is taken forgranted and only incremental changes in the

item are considered.



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Performance Budgeting

Traditional budgeting does not relate inputsor costs with outputs and performance.

Performance budgeting emphasizesoutputs and performance rather thaninputs;

Output is measured in terms of the amount

of goods and services produced, thenumber of cases handled, the number ofpersons affected.

Efficiency is usually measured in terms of


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Planning, Programming,

Budgeting System (PPBS)

Also known as program budgeting;

Like performance budgeting, PPBS

emphasizes outputs;

PPBS creates scope for selection of the

most efficient alternative and enable the

decision-makers to allocate resources on

the basis of benefit/cost relationships.


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Zero-Base Budgeting (ZBB)

Zero-base budgeting means preparation of

budget from a zero base.

The concerned organization might be an oldor a new one, it is assumed that it is starting

as a new organization.

Previous patterns of expenditures are not

taken as the basis and each existing item of

expenditure has to be annually re-justified;


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Medium Term Budgeting

A new Budgeting approach generally known as Medium

Term Expenditure Framework (MTEF).

A Whole-of-government strategic policy expenditure

framework within which ministers and line ministries areprovided with grater responsibility for resource allocation

decisions and resource use.

to balance what is affordable in aggregate against the

policy priorities of the country. consists of a top-down resource envelop, a bottom-up

estimation of the current and medium-term cost of

existing policies and matching of these cost with

available resources.


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MTEF: the Basics

Rational approach covering 3-5 years

Covers both expenditure and income

Covers both capital and recurrent

Less detailed than budget

Sets resource envelopes for each sector/ministry

through medium-term

Budget should be first year of MTEF Rolling approach updated annually

Plans for year 2 onwards dont have same legal

force as budget


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Standard Government (Fiscal) Account

Revenue and GrantsTaxes

Non tax

Grants

Expenditures and Net Lending

RecurrentCapital

Net Lending-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Overall Balance (Surplus/Deficit)---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Financing

Foreign (net)

Domestic

Bank

Non bank


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Revenues and Grants

Revenues: all non repayable receipts (i.e. receiptswhich do not give rise to an obligation of repayment),except grants

- Tax revenues: compulsory and unrequited receipts collectedby the government for public purposes (Income Tax, CustomDuty, VAT, Excise Duty etc.).

- Non tax revenues:Dividend/profits from public financial andnon-financial enterprises; interest, fees and charges,

property income. Grants: unrequited receipts from other governments or

international institutions.


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Expenditures and Net Lending

Expenditures:

- Recurrent or Current Expenditure:wagesand salaries; goods and services; interest payments;

subsidies and current transfers.- Capital Expenditure:acquisition of fixed assets

(government investment); capital transfers (transfersfor the purpose of acquiring capital asset)

Net Lending: loans given by government minusrepayments made by respective borrowers (e.g. loans togovernment employees, public enterprises, local bodies)

budget (English).ppt

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Transcript of budget (English).ppt