Bangladesh Budget for fiscal 2011-2012, GDP and Defence spendiing

[eastwatch]

EXCLUSIVEMuhith's Tk 1.6tln budget Thursday | Bangladesh | bdnews24.com

EXCLUSIVE
Muhith's Tk 1.6tln budget Thursday
Thu, Jun 9th, 2011 2:14 am BdST
Abdur Rahim Harmachi

Dhaka, June 9 (bdnews24.com) — The finance minister has said Thursday's budget will be the roadmap for fulfilment of remaining promises that the government made in the past.

"We have realised many of the things that we had promised in our manifesto. What remains will be addressed in this budget. The next two budgets will be all about implementation," A M A Muhith told bdnews24.com.

"So, this budget is very important for me," Muhith added.

The budget would be a highly ambitious one like the current one, with a volume of about Tk 1.6 trillion, the finance minister said.

The National Economic Council (NEC) has already approved a Tk 460-billion ADP (annual development plan) -- 19 percent larger than that of the current fiscal.

The National Board of Revenue (NBR) sources say the revenue target for the next fiscal is close to Tk 1.2 trillion, of which some Tk 920 billion would come from NBR.

"VAT and income tax will be emphasised in the coming budget," Muhith said and added that announcements would be made to amend certain laws.

"Tax-free income may be raised to Tk 180,000 from 165,000 considering the prevailing inflation rate," he said

MoF OUT OF STOCK MARKET

An announcement to the effect that the finance ministry would wash its hands of the capital market would be made in the budget, Muhith disclosed.

"Finance ministry won't interfere in the stock market. The market regulator, SEC (Securities and Exchange Commission) will do everything. That is how SEC is being reformed," he said.

PEOPLE'S FEEDBACK

In order to make the budget more participatory, all documents of the budget would be available at the government websites Finance Division :: Ministry of Finance, National Web Portal Of Bangladesh - Portal Home, National Board of Revenue (NBR), Bangladesh, Planning Commission, Implementation Monitoring and Evaluation Division (IMED), Bangladesh Government, Prime Minister's Office - Home and the privately-held online newspaper website bdnews24.com | First with the news 24/7.

A feedback form would also be available at these addresses that people could fill up and provide their comments and recommendations on the budget. All recommendations will be reviewed.

A post-budget press conference is scheduled at Osmani Auditorium on June 10.

The budget will be passed by parliament towards the end of this month.

bdnews24.com/arh/jk/sh/nir/0135h

 

[eastwatch]

EXCLUSIVEMuhith's Tk 1.6tln budget Thursday | Bangladesh | bdnews24.com

EXCLUSIVE
Muhith's Tk 1.6tln budget Thursday
Thu, Jun 9th, 2011 2:14 am BdST
Abdur Rahim Harmachi

Dhaka, June 9 (bdnews24.com) — The finance minister has said Thursday's budget will be the roadmap for fulfilment of remaining promises that the government made in the past.

"We have realised many of the things that we had promised in our manifesto. What remains will be addressed in this budget. The next two budgets will be all about implementation," A M A Muhith told bdnews24.com.

"So, this budget is very important for me," Muhith added.

The budget would be a highly ambitious one like the current one, with a volume of about Tk 1.6 trillion, the finance minister said.

The National Economic Council (NEC) has already approved a Tk 460-billion ADP (annual development plan) -- 19 percent larger than that of the current fiscal.

The National Board of Revenue (NBR) sources say the revenue target for the next fiscal is close to Tk 1.2 trillion, of which some Tk 920 billion would come from NBR.

"VAT and income tax will be emphasised in the coming budget," Muhith said and added that announcements would be made to amend certain laws.

"Tax-free income may be raised to Tk 180,000 from 165,000 considering the prevailing inflation rate," he said

MoF OUT OF STOCK MARKET

An announcement to the effect that the finance ministry would wash its hands of the capital market would be made in the budget, Muhith disclosed.

"Finance ministry won't interfere in the stock market. The market regulator, SEC (Securities and Exchange Commission) will do everything. That is how SEC is being reformed," he said.

PEOPLE'S FEEDBACK

In order to make the budget more participatory, all documents of the budget would be available at the government websites Finance Division :: Ministry of Finance, National Web Portal Of Bangladesh - Portal Home, National Board of Revenue (NBR), Bangladesh, Planning Commission, Implementation Monitoring and Evaluation Division (IMED), Bangladesh Government, Prime Minister's Office - Home and the privately-held online newspaper website bdnews24.com | First with the news 24/7.

A feedback form would also be available at these addresses that people could fill up and provide their comments and recommendations on the budget. All recommendations will be reviewed.

A post-budget press conference is scheduled at Osmani Auditorium on June 10.

The budget will be passed by parliament towards the end of this month.

bdnews24.com/arh/jk/sh/nir/0135h

At the end of this fiscal our GDP will stand perhaps at $115 billion, and the budget for next year has been finalized at about $21 billion. The budget allocations are more than 18% of GDP. The ratio is quite large comparing to GDP, 10% is very normal in the developed countries.

The expenditures will be supported with borrowings from both domestic and international sources. It will be probably a deficit budget. A continuous infusion of borrowed money will cause a rise of inflation, the value of Taka will also go go down.

But, a defecit budget is required to build the country's physical infrastructures. When infrastructures are being built, it will induce revamping of industrial productions such as cement, steel etc.

It will also need an increased supply of other construction materials such as sand, bricks, stones etc. These activities will bring about increased industrial production and transportation. All these extra activities will create additional employment opportunities.

A deficit budget creates inflation, but it also creates demand for industrial goods and labour. The best way is to balance the two so that economy expands with less inflation.

 

[integra]

The government proposed an increase of Tk 1,216 crore in the 2011-12 budget for modernising the country’s armed forces.

“There is no alternative to augment the defence capacity of the country through modernisation of the armed forces,” Finance Minister AMA Muhith said as he proposed allocating Tk 12,134 crore for the armed forces against an allocation of Tk 10,918 crore in the current fiscal year.

Side by side, the government has been trying to procure modern equipment and modern technology-based military hardware and to enhance other benefit for the defence forces, he added.

 

[Zabaniyah]

So, what's their shopping list? Any idea?

JF-17s would be good to replace the A-5s.

 

[Avisheik]

The need to mordernise our defence is very crucial as our heavy weapons are quite outdated. Its good to see the government is trying to do something about it

 

[integra]

So, what's their shopping list? Any idea?

JF-17s would be good to replace the A-5s.

Well there was this interview with our Air Marshal SM Ziaur Rahman
by Alan Warnes this year which was more like this......

Are you looking to buy any new aircraft?
“Any defence procurement is primarily a
government decision. However, the BAF generally
does the technical vetting and evaluation of
possible options based on its needs. While the
L-39 will continue in the fighter-training role, we
are now looking seriously at a new generation
advanced jet to bridge the gap for new multirole
fighters. A team is currently studying and
evaluating the capabilities of the Aero L-159,
Aermacchi M-346, BAE Hawk, KAI T-50, Hongdu
L-15 and Guizhou FTC-2000. Once these have
been completed we will look closer at the costs
(project lifecycle and infrastructure costs etc).
Along with the fighters we will also need some
helicopters to perform the air logistics role and
the increasing demand for participation in UN
missions. Following a proposal, we are also
studying the JF-17 Thunder and aircraft of its class,
purely as a weapons delivery platform and how the
systems along with avionics that we want can be
implemented at a cost affordable to the BAF."

 

[Avisheik]

I think our navy and coastguard needs the money more as they have to protect our resource rich bay of bengal and have to fight pirates along the bay. Futhermore, i think we more naval aviation as bangladesh navy only has two helicopters.

 

[Zabaniyah]

I think our navy and coastguard needs the money more as they have to protect our resource rich bay of bengal and have to fight pirates along the bay. Futhermore, i think we more naval aviation as bangladesh navy only has two helicopters.

I always failed to understand why we even need coastguard. It is something that only large countries have. Maritime defense and security should be the responsibility of the navy.

But yeah, not enough is being done against pirates. Even with coastguard around

 

[UKBengali]

Interesting that the defence budget is staying pegged at around 1.5% of GDP, which is the same as last year. Shows the government has no interest in a beefed-up military. More money towards the poor then which is desperately needed.

 

[eastwatch]

Record spending on the cards

Friday, June 10, 2011
Front PageRecord spending on the cards
Revenue target also set high; interest payment rises steeply
Rejaul Karim Byron

The finance minister yesterday proposed Tk 1,63,589 crore expenditure in the next fiscal year's budget, a 26 percent rise from the revised one of FY2010-2011, the highest in the history of Bangladesh.

The general trend is 15 to 16 percent rise.

In the current fiscal year, the rise was 19 percent, the second highest, to meet the ruling alliance's election pledges, although the expenditure was cut during the revision.

However, the government said the expenditure on subsidy will be slashed in the new budget, which signals that it will make large scale adjustment in subsidised products like power and energy.

To meet the increased expenditure, an ambitious target of collecting foreign assistance and non-tax revenue has been set, although the government failed to do so in the current FY.

Also, the government aims at collecting higher value added tax (VAT) and income tax and reforming those sectors.

Development expenditure, up by 27.83 percent from the revised budget, has been fixed at Tk 50,642 crore, of which Tk 46,000 crore is for annual development programme (ADP).

Non-development expenditure, raised by about 24 percent, has been fixed at Tk 1,02,903 crore.

In the current fiscal year, non-development expenditure was hiked by only 11 percent against the previous year's revised budget.

The highest expenditure in a single sector -- 11 percent of the total budget -- is on interest payment. Allocation in the sector is Tk 17,997 crore, with a 24 percent spending rise in the next fiscal year.

Expenditure on interest of the domestic loan will be Tk 16,519 crore.

Block allocation in both development and non-development expenditure increased by 655 percent against the revised budget and will stand at Tk 6,826 crore.

Where the block allocation will be spent could not be known in detail.

For new recruitment in different ministries and divisions, an additional Tk 1,161 crore has been proposed for pay and allowances for the next fiscal year.

The subsidy is eight percent of the total revenue budget while it was 8.3 percent in the current FY. However, no details of the subsidy were available.

Tk 4,500 crore has been allocated as agriculture subsidy which was Tk 4,000 crore in the current FY. But in the revised budget, it was increased to Tk 5,700 crore.

Revenue earning has been increased by 24.37 percent to make it Tk 1,18,385 crore. Of the amount, NBR tax has been raised by 21.52 percent and non-tax revenue by 40 percent.

Proposal has been made to increase income tax by 24.68 percent, VAT 21.32 percent and supplementary duty 19.66 percent.

In the next fiscal year's budget the deficit has been estimated at Tk 45,204 crore or five percent of the GDP.

To meet the deficit, the new budget proposes increasing foreign borrowing by 71 percent with a target of Tk 18,685 crore, although in the current FY the government failed to utilise one-third of the targeted foreign assistance.

Bank borrowing was raised by 17 percent in the revised budget of the current fiscal year.

In the budget of the next fiscal year, it has been raised by 10 percent over the revised budget and the borrowing target has been fixed at Tk 18,957 crore.

In the same way, borrowing target from the savings instrument has been set at Tk 8,251 crore which was Tk 6,438 crore in the revised budget.

To meet the target, the finance minister has announced to increase the rate of interest on savings instrument and reduce tax rate.

 

[eastwatch]

New Age | Newspaper

Tk 8,99,670 crore GDP with 7pc growth targeted
Kazi Azizul Islam

The government has targeted GDP growth worth Tk 8,99,670 crore or $123 billion in the upcoming 2011-12 fiscal year along with 7 per cent growth, said finance minister AMA Muhith in his budget statement on Thursday.

He said that the growth rate had been provisionally estimated at 6.7 per cent for the current FY2010-11, and the revised GDP for FY2009-2010* amounted Tk 7,87,495 crore.

‘Considering the prospects and potential risks in the context of global and domestic economic perspectives, we have set our real GDP growth target for FY2011-12 at 7 per cent,’ said Muhith.

Even though Bangladesh’s economic growth prospects are unlimited, there are challenges as well, he told the lawmakers.

Bangladesh in the current FY2010-11 entered the club of countries whose annual GDP is worth more than a hundred billion dollars. Less than one hundred countries are in this club, he said.

‘We have achieved a provisionally estimated 6.7 per cent growth in the current fiscal year,’ Muhith claimed.

‘We want to achieve real GDP growth rate of 8 per cent by 2014 and raise it to 10 per cent by 2017, and sustain it at that level thereafter,’ said Muhith. ‘A significant portion of the huge investment needed to fulfil this goal should come directly from increased domestic revenue mobilisation.’

He, however, pointed out that achieving this level of growth depends on the improvement of the agriculture sector as well as the development of the infrastructure of the power and energy and communications sectors.

The finance minister mentioned that in FY2008-09, Bangladesh had achieved real GDP growth of 5.7 per cent though there was 5 per cent negative growth in the global economy.

This trend continued in FY2009-10 and 6.1 per cent real GDP growth was achieved.

Muhith told lawmakers that the higher-than-expected growth in the agriculture and export sectors is helping the country to achieve good growth in GDP.

He said that while export earning amounted to $16.2 billion in FY2009-10* with only 4.1 per cent growth, it has increased to $18.2 billion in the first 10 months of the current fiscal year with growth rate of 40.9 per cent. He provisionally estimated that export earning would amount to $22.4 billion with growth rate at 38 per cent.

The finance minister has targeted export earning at $25.7 billion with growth rate at 14.5 per cent for the upcoming FY2011-12.
===============================================================================================================

Notes: I have edited printing mistakes in two points that have been marked with asterisk *. Thanks.

 

[eastwatch]

The provisional GDP of Bangladesh will stand at about $115 billion in FY2010-11 that ends in June this year. Perhaps, another month will be required to calculate this fiscal's real GDP. Some economists do not agree with the provisional estimate of a 6.7% growth. They say govt has failed to truly estimate the growth in the service sector. They say, if counted in a proper manner, the GDP growth will become near 7%. Well, let us wait for another month and hope for the best results to come out.

 

[eastwatch]

Total budget is Tk.163,589 Crore and the defense budget is Tk.12,134 Crore. It means an allocation of 7.4% for defense. However, the it is only 1.3% of the GDP, which will stand at $123 billion next fiscal.

 

[eastwatch]

Total budget is Tk.163,589 Crore and the defense budget is Tk.12,134 Crore. It means an allocation of 7.4% for defense. However, the it is only 1.3% of the GDP, which will stand at $123 billion next fiscal.

I must add that the Tk.12,134 Crore or about $1.65 billion defense budget here is for payment of salaries, maitenance of weapons and other miscellaneous expenses. Budget for procurememnt of equipments, artilleries, Howitzers, tanks, planes, frigates, FACs etc is separate from this budget. GoB does not declare the procurement budget openly.

 

[UKBengali]

I must add that the Tk.12,134 Crore or about $1.65 billion defense budget here is for payment of salaries, maitenance of weapons and other miscellaneous expenses. Budget for procurememnt of equipments, artilleries, Howitzers, tanks, planes, frigates, FACs etc is separate from this budget. GoB does not declare the procurement budget openly.

Which means that it is around 1.5% of GDP in total as Bangladesh does not tend to procure huge amounts of military hardware. Even if the percentage of GDP spent on defence stays constant till 2020, the military can look forward to more and more money every year due to the hopefully continued fast growth of the BD economy.