Finance Ministry
Finance Ministry stresses the importance of balancing recurrent and capital expenditure
The Finance Ministry has highlighted the crucial need for a balanced approach to budgetary allocations between recurrent and capital expenditure, recognizing their collective impact on the country's growth prospects and social welfare. This perspective is outlined in the ministry's document, the 'Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26)', which underscores the different priorities of developed and developing nations in terms of government spending.
Developed countries often prioritize transfers and subsidies, whereas developing economies are more inclined towards investing in social and community services. Despite the positive outcomes from income transfers in enhancing citizens' lives, there is a pressing need to ramp up capital expenditure to cater to the increasing public investment demands and foster the creation of productive assets.
Budgetary classifications broadly categorize government spending into recurrent and capital expenditures. Recurrent expenditure encompasses wages, goods and services purchases, subsidies, transfer payments, and interest on loans. In contrast, capital expenditure is directed towards building and enhancing productive assets, including developments under the Annual Development Program (ADP) and non-ADP initiatives.
Sikder Group responds to allegations following ACC case against directors
The trend in capital expenditure, representing a portion of the total expenditure, has seen an upward trajectory, albeit with fluctuations, while recurrent expenditure has shown a gradual decrease. The revised budget for the fiscal year 2022-23 allocated 59.1 percent to recurrent expenditures, with projections indicating a slight reduction over the next three years. Meanwhile, capital expenditure is set to rise from 40.9 percent in the 2022-23 fiscal year to 41.3 percent by 2026, reflecting an ongoing commitment to bolstering public investment.
The increase in recurrent expenditure from 56.7 percent in FY 2017-18 to 59.4 percent in FY 2021-22 was influenced by various stimulus packages introduced to support vulnerable groups during the combined challenges of the COVID pandemic and the Russia-Ukraine conflict. Conversely, capital expenditure through the ADP, a critical component of the budget, has experienced modest growth from 4.5 percent of GDP in FY18 to an estimated 5.1 percent of GDP in FY 2022-23.
This strategic focus on balancing recurrent and capital expenditures aligns with the government's objectives to drive sustainable economic growth while ensuring the welfare of its citizens through prudent fiscal management.
Eid holiday: Trade activities through Benapole port to be suspended for 5 days
Amid lower govt spending relative to GDP, Bangladesh plans increased investment to stimulate pvt sector
Bangladesh's Finance Ministry is tackling what it identifies as one of its most formidable challenges: significantly amplifying public expenditure to catalyse sustained growth within the private sector.
An official document from the ministry underscores that, in comparison to other economies, Bangladesh's government spending as a percentage of GDP markedly trails, thereby emphasising the urgency to augment investment.
Data from the World Economic Forum and the IMF (as of April 2023), reveal Bangladesh's public expenditure at 13.1% of its GDP, a figure that stands in stark contrast to countries like France at 58.5%, Sweden at 46.8%, and even neighbouring India at 28.8%. This discrepancy highlights the room for growth in Bangladesh's fiscal strategy.
The government, aiming to elevate GDP growth and living standards, views the expansion of its expenditure as crucial. This ambition is supported by the progressive implementation of reforms in Public Financial Management. Historically, the government has gradually increased its spending relative to GDP, signaling a positive trajectory.
Interest rate for April set at 13.55%, for consumer loans add 1%
Outlined in the 'Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26)' from the Finance Division, the government's medium-term strategy is geared towards securing inclusive and high growth. This strategy is aligned with Bangladesh's Vision 2041, the 8th Five Year Plan, and the Sustainable Development Goals (SDGs), focusing on priority sectors including infrastructure, industrial production, food security, job creation, healthcare, and education among others.
In anticipation of the demands of the Fourth Industrial Revolution (4IR), significant allocations have been dedicated to human resource development, particularly in education and skills training. The fiscal projections set public expenditure targets at 15.2% for the 2023-24 fiscal year, 15.4% for 2024-25, and 16.2% for 2025-26.
The document further highlights Bangladesh's progression to a lower-middle-income country, with aspirations to attain upper-middle-income status by 2031. This ambition aligns with the developmental targets set within the 8th Five Year Plan and reflects the government's commitment to resuming the rapid economic growth witnessed pre-COVID-19 and pre-Russia-Ukraine war.
Banks to remain open on April 5, 6, and 7 for payment of garment workers’ salary, bonus
In response to the COVID-19 pandemic, the government prioritised life and livelihood protection, adopting an expansionary fiscal policy and channeling additional funds into critical sectors.
Despite the global political and economic instability, these measures have begun to show promise, with expectations of returning to pre-pandemic growth levels and policies aimed at promoting pro-poor and inclusive growth.
As Bangladesh looks forward, the Finance Ministry is set on formulating strategies to enhance pro-poor growth, stimulate both domestic and international private investment, bolster public investment, curb inflation, generate employment, and alleviate the balance of payment pressures. These objectives underscore a holistic approach to not only recovering from recent global challenges but also setting a solid foundation for long-term, sustainable development.
NBR’s three-pronged strategy to boost revenue collection
Aiming to significantly boost revenue collection from domestic sources, the National Board of Revenue (NBR) is adopting a three-pronged approach.
These are: digital transformation, expansion of tax net, and enhancing administrative capacity.
The core idea is to make tax payments easy and transparent to improve taxpayer services which in turn will help NBR to collect more revenue, according to an official document.
According to the Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26) of the Finance Division of Finance Ministry, the government has taken some Major reform measures to materialise the move.
The VAT & Supplementary Duty Act 2012 has been implemented in July 2019. With the implementation of the new act, the collection of VAT and supplementary duty is expected to receive a significant boost in the medium term. After the initial hiccup and the shortfall due to the outbreak of COVID-19, revenue collection accelerated in FY22.
The government has enacted the new Customs Act, which replaced the Customs Act 1969. International best practices in customs, including that of the World Customs Organization (WCO), the revised KYOTO Convention and the WTO Trade Facilitation Agreement have been incorporated here.
NBR will go after house and flat owners for not filing returns; NBR Chairman
The law aims to harmonise and simplify customs processes to facilitate the collection of custom duties.
The new Income Tax Act is also expected to create an enabling environment for taxpayers, streamline income tax assessment and collection, and facilitate domestic and foreign investment.
To implement the new VAT law, the NBR undertook the ‘VAT Online Project (VoP)’ which was in operation since 2013 and concluded in June 2021.
Under the VOP, the official document said that the three important automation measures have been completed. First, the Online VAT Registration began in March 2017. Again, the central registration system has been in force since July 2019. The NBR has introduced online return submission in July 2019. The digital filing system has been introduced in the form of online submission of VAT returns.
The NBR has rolled out the electronic payment (e-payment) of customs duties in 2017, income tax in 2012 and VAT in 2020. Income tax can be paid through MFS (mobile financial services) as well.
To facilitate real-time deposit of government money to the national exchequer, the government has launched the Automated Invoice Portal. This Automated Challan (also known as A-Challan) will act as the receipt window of the government. The payment of income tax has already been brought under the A-Challan system on a pilot basis.
The NBR now plans to expand its use for payment of VAT and customs duties. The A-Challan will ensure the timely deposit of money including the prevention of fake return submission and revenue evasion.Moreover, the discrepancy between the amount of revenue collected by the NBR and the accounts given by the Accounting Offices will be eliminated.
The Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26) said that individual taxpayers can now submit their tax returns online.
NBR extends deadline for filing companies’ tax returns to April 30
The NBR has successfully launched eTDS Environment for easy and hassle-free processing of income tax at the source. With the introduction of this system, taxpayers’ time, cost and visits have been reduced to almost zero. Taxpayers can now submit fourteen reports in the eTDS environment.
To stop evasion in VAT and enhance VAT collection, the government has introduced Electronic Fiscal Devices (EFD) with a sales data controller mechanism.
The government has already installed 9270 EFD/SDC (Sales Data Controller) machines. NBR has selected 24 sectors, including residential hotels, bakeries and fast foods, decorators and caterers, sweet shops etc. for this purpose.
To broaden the coverage, the government has decided to outsource the installation of EFD/ SDC machines with a target of 60,000 EFD/ SDC in the first phase and 3,00,000 in five years, if the first phase brings good results.
Besides, to prevent tax evasion and to bring transparency in VAT record keeping, the government has made the use of NBR-prescribed VAT software mandatory in VAT-registered industries with annual turnovers of Tk 5 crore or above.
The NBR has made provisions to enable internet-based companies, such as Google, Facebook, Microsoft etc. to pay their VAT on online sales.
This allows these companies to pay their VAT through their authorised VAT agents without opening their office in Bangladesh.
The NBR plans to operationalise the risk management system to ensure that no more than 10 percent of the import consignments are subject to physical examination. To that end, the NBR has established a Central Risk Management Unit/Commissionerate for Customs.
To streamline the bonded warehousing system, reduce its misuse and make it transparent, the government has taken a project that aims to automate the bond management system by June 2023. Meanwhile, the licensing module has started operation and other modules will become operational soon.
Bangladesh Customs will soon be conducting a Time Release Study in the major custom houses to take stock of the actual time taken in the release of imported consignments. The objective of the TRS will be to identify bottlenecks in customs clearance and to take measures to reduce clearance time.
The NBR strives to expand the number of taxpayers and has made the return submission mandatory for all TIN-holders with a few exceptions.
Other reform efforts by the NBR included – i) implementation and activation of Online National Single Window, Post Clearance Audit, Advance Ruling, Authorised Economic Operator, and thereby increasing dynamism in international trade; ii) full implementation of online income tax return submission under SGMP project; iii) implementation of “Individual Source Tax Deduction Monitoring Zone” to strengthen income tax deduction monitoring; iv) expansion of the e-Payment system in income tax; v) activation of transfer pricing and anti-money laundering activities; and vi) strengthening ICT infrastructure construction and automation activities.
Administrative expansion of the income tax department is underway, the Medium Term Macroeconomic Policy Statement added.
Introduction of the Document Verification System (DVS) has brought financial discipline and positively contributed to boosting tax collection both in income tax and VAT by increasing transparency.
NBR collects nearly Tk 2 lakh crore in 7 months, growth over 15%
Finance Ministry releases Tk 1000 crore incentives for knitwear sector ahead of Eid
The Ministry of Finance has released cash incentives of Tk1,000 crore for Bangladesh's export-oriented knitwear sector.
The ministry took the decision 11 days after receiving an application of Bangladesh Knitwear Manufacturers and Exporters Association's (BKMEA) for financial support for payment of salary and Eid bonus ahead of Eid-ul-Fitr.
Read: Bangladesh Bank has revolutionised digitalisation of financial sector: Dr Atiur
The request for cash assistance was made to the government on March 30 in a letter signed by the BKMEA president AKM Salim Osman.
The letter stated that if the financial assistance is not given, the export sector may be in extreme trouble over the payment of salary and bonus to the workers before Eid.
Bangladesh Bank has been instructed by the Ministry of Finance and the Comptroller General of Accounts to clear the amount of cash assistance.
Read More: Dip in US market fails to dent apparel sector's growth momentum.
World Bank spring meeting begins in Washington today, announcement on $50bn allocation to face global crisis likely
The spring meeting of the World Bank Group and the International Monetary Fund (IMF) begins today (April 10, 2023) in Washington DC, USA.
This meeting is likely to announce an allocation of USD $50 billion from the organisations to face the global crisis.
The seven-day meeting will continue till April 16 at the headquarters of the IMF and the World Bank Group in Washington.
Read More: Bangladesh's GDP growth expected to pick up to 6.2% in FY2024: World Bank
According to the Ministry of Finance, a delegation of six members is participating in the spring meeting led by the Governor of Bangladesh Bank, Abdur Rouf Talukder.
Along with the governor, Bangladesh Bank Chief Economist Habibur Rahman, Finance Secretary Fatima Yasmin and Additional Secretary of Finance Department Rehana Parveen and two officials from the Economic Relations Department (ERD) are participating in the meeting.
Apart from this, three more officials from the Bangladesh Embassy in the United States are expected to join the meeting along with the Bangladesh team.
Read More: World Bank agrees to finance for development of metro rail-centric communication
Generally, such meetings are led by the finance minister. However, Finance Minister AHM Mustafa Kamal is not joining the meetings this time.
At this meeting of the World Bank Group, the International Bank for Reconstruction and Development (IBRD), a subsidiary of the organization, may announce an additional financing of $50 billion to deal with the global crisis.
Being a member of IBRD, Bangladesh will also get the benefit of this financing, the finance ministry sources said.
Read More: New World Bank leadership must put Climate Action as top priority: V20
The World Bank's spring meeting will be chaired by President of France Emmanuel Macron, and Prime Minister of Barbados Mia Amor Mottley. They will be joined by world leaders, academics, development experts and climate experts.
Besides, finance ministers, central bank governors of 189 World Bank member countries will participate.
Finance Ministry to formulate policy for land registration at actual price
The Ministry of Finance plans to reform the land registration system with the real price of land instead of mouza based on the government fixed rate method.
As a result, the price at which the land is bought or sold will be mentioned in the land registration deed document. Finance Minister AHM Mustafa Kamal has decided to come up with an effective method for buying and selling land at a competitive market price.
Kamal announced this decision in a meeting of the National Coordination Committee, held recently, which was formed to formulate and implement guidelines and policies to prevent money laundering and financing of terrorism.
Financial Institutions Division Secretary Sheikh Mohammad Salim Ullah has been given the task of developing the new system.
He will do the work along with coordination of the Ministry of Land, Directorate of Registration; Ministry of Law, Justice and Parliamentary Affairs, and National Board of Revenue (NBR).
Read: Bangladesh makes progress in efforts to locally produce Covid-19 vaccines: Health Minister
The officials who participated in the meeting said that the finance minister said a large amount of legitimate money is becoming illegal because high-value land is shown at a much lower price, in the deed registration. The money is smuggled abroad later as it becomes illegal income as per law.
The cabinet department held many meetings on the matter, but no decision could be reached. It is better to prevent smuggling than to recover the money smuggled out of the country, the Finance Ministry thought.
If land registration is made on the market rate, money laundering will be reduced.
In the meeting, Bangladesh Bank Governor Abdur Rouf Talukder said that due to the fact that the real value is not shown during the land registration, many times legal money becomes illegal.
It is possible to solve this problem only through the market-based rate mentioned in the land deed registration, he said.
Enhance surveillance against manipulation to build sustainable share markets: Finance Ministry
The ministry of finance called strengthening capital markets literacy activities to raise awareness among investors to build sustainable stock markets for future generation. The ministry has given some specific directives to Bangladesh Securities and Exchange Commission (BSEC) as part of government's initiative to reform the sustainable capital market.
Read:Stock markets continue to fall on the third day Tuesday The Financial Institutions Division (FID), a wing of the finance ministry, has sent a letter with the directive to the BSEC chairman recently. The letter asked BSEC to enhance surveillance so that no company or institution can enter or exit the capital market illegally. At the same time, the letter mentioned that a team of finance ministry will keep a close watch on the markets, so that no dishonest syndicate can influence the capital market through manipulation.
Read:Capital market to follow banking sector's ‘lead’ in operating during lockdown The letter also directed BSEC to keep close observation on the companies, stakeholders or institutions’ share transactions in the capital market, and bring suspicious transactions under special scrutiny. The letter has also called for instant legal action if any company is found involved in anything illegal and strengthens coordination with all organizations involved in the capital market.
Bangladesh’s forex reserve expected to thrive on increased remittance inflow
Bangladeshis working abroad are expected to send huge money back home over the next three fiscal years helping the country’s foreign currency reserve to hit USD 53.99 billion by the middle of 2023-24 fiscal year.
The government projects over a 12 percent increase on average in the inflow of remittance, the key driver of the country’s more than $409 billion economy, over the next three fiscal years, including the current one.
According to a Finance Ministry document obtained by UNB, the remittance inflow of 2019-20, 2020-21 and 2021-22 was 11.2 percent and 36 percent while the target for the current 2021-22 fiscal is 15 percent with a projection of 12 percent and 10 percent for 2022-23 and 2023-24 fiscals respectively.
Read:Bangladesh Bank allows receiving remittances through OPGSPs
The document reveals that the foreign exchange reserve was USD 36.04 billion and USD 44 billion in 2019-20 fiscal and 2020-21 fiscal respectively while the target for the current 2021-22 fiscal is USD 48.37 billion with projection of having USD 50.74 billion and USD 53.99 billion for 2022-23 fiscal and 2023-24 fiscal respectively.
For a developing and emerging economy, the role of foreign remittances has always been crucial. In the context of Bangladesh, foreign remittances are expected to help reduce the current account deficit and augment GDP growth by stimulating domestic demands, the document says.
On the other hand, it says, the micro-level context shows that remittance inflows affect the lifestyle of the household as well as increase the saving level that can serve as an important source of capital.
The document mentions that the government has taken several initiatives to increase remittance inflows as well as foreign employment.
The initiatives include providing cash incentives for sending remittances through banking channels, simplification of remittance-related rules and regulations, reduction in administrative costs for sending remittances through financial institutions and exploration of new market sources for manpower export.
The official remittance inflows began going up in the 2020-21 fiscal despite global and domestic impacts of the Covid-19 pandemic. The total inflow of foreign remittances during the 2020-21 fiscal was $24.77 billion which is 36 percent higher than the same period of the previous fiscal year.
According to the document, the current account deficit widened in the 2019-20 fiscal due to weak exports before moving into surplus in the 2020-21 fiscal, supported by a surge in official remittance inflows.
Parliament passes new budget of ‘lives and livelihoods’
Parliament passed the Tk 603,681 crore national budget for the fiscal year 2021-22 on Wednesday, the last day of the outgoing fiscal year (2020-21).
Finance Minister AHM Mustafa Kamal moved the Appropriations Bill, 2021 seeking a budgetary allocation of Tk 792,912.95 crore which was passed by voice vote.
On Tuesday, Parliament passed the Finance Bill 2021 with some changes.
Following the proposal mooted in the House by the Finance Ministry for the parliamentary approval of appropriation of funds for meeting necessary development and non-development expenditures of the government, the ministers concerned placed justifications for the expenditures by their respective ministries through 59 demands for grant.
Earlier, Parliament rejected by voice vote 625 cut-motions that stood in the name of opposition members on 59 demands for grants for different ministries.
Twelve MPs from Jatiya Party and BNP submitted their cut-motions on the budget, themed as "Bangladesh towards a resilient future protecting lives and livelihoods'.
Also read: Parliament passes Finance Bill, allows whitening of undisclosed money
They are Kazi Firoze Rashid, Rustam Ali Farazi, Mujibul Huq, Fakhrul Imam, Pir Fazlur Rahman, Shamim Haider Patwari, Begum Rawshan Ara Mannan, Harun Ur Rashid, Mosharrof Hossain, Liaquat Hossain Khoka, Mokabbir Kan, and Rumeen Farhana.
They were, however, allowed to participate in the discussion on Law Ministry, Secondary and Higher Education Division and Health Services Division.
Later, Speaker Dr Shirin Sharmin Chaudhury applied guillotine to quicken the process of passing the demands for grants for different ministries without giving the lunch break.
Opposition and independent MPs were present in the House when the Appropriation Bill was passed in Parliament and they did not raise any voice against passing of the bill.
The finance minister on June 3 placed a Tk 603,681 crore-national budget for 2021-22 fiscal to get the economy moving in spite of the crippling Covid-19 pandemic with a strong focus on vaccinating the population and shoring up their jobs.
A bold target has been set to achieve 7.2 per cent of GDP growth with a deficit totalling Tk. 214,618 crore, which is 6.2 per cent of GDP.
To meet the deficit, Tk 101,228 crore will come from external sources, while Tk 113,453 crore from domestic sources of which Tk 76,452 crore will come from the banking system and Tk 37,001 crore from savings certificates and other non-bank sources.
Also read: Medical College (Governing Bodies) (Repeal), Bill 2021 placed in parliament
The growth rate for 2021-2022 has been fixed at 7.2 percent, remaining consistent with the government’s long-term plan and taking the post-Covid recovery situation into account while expecting the inflation rate will be 5.3 per cent during the period.
Total allocation for operating and other expenditures has been set at Tk 378,357 crore, while the allocation for the annual development program is Tk 225,324 crore.
The total revenue income in the fiscal year 2021-2022 has been fixed at Tk 389,000 crore, which is 11.3 percent of GDP. Out of this, Tk 330,000 crore will be collected through the NBR sources. Tax revenue from non-NBR sources has been estimated at Tk 16,000 crore, while the non-tax revenue is estimated to be Tk 43,000 crore.
The allocation for the social infrastructure sector in the next fiscal budget is Tk 170,510 crore, which is 28.25 percent of total allocation, in which allocation for human resources sector (education, health and other related sectors) will be Tk 155,847 crore.
The allocation proposed for the physical infrastructure sector will be Tk. 179,681 crore or 29.76 percent, in which Tk 74,102 crore will go to overall agriculture and rural development, Tk 69,474 crore to overall communications, and Tk 27,484 crore to power and energy.
A total of Tk 1,45,150 crore has been allocated for general services, which is 24.04 percent of the total allocation. Tk 34,648 crore is for public-private partnerships (PPP), financial assistance to different industries, subsidies, equity investments in state-owned, commercial and financial institutions, which is 5.74 percent of the total allocation.
Govt. set to expand social safety allowances in upcoming budget
The government is set to expand the social safety net in the upcoming budget as the Covid-19 has pushed at least 2.5 crore people below the poverty line.
In the forefront of the beneficiaries are the elderly persons, women left by husbands and widows, said sources at the finance ministry and national board of revenue.
Read: Prioritise saving lives, tackling inequality in the budget: CPD
Finance Minister AHM Mustafa Kamal will place the national budget for 2021-22 in Parliament on June 3.
The budget will set aside Tk. 3420 crore for elderly persons, up from Tk2940 crore in the current fiscal. Some 97 lakh persons will get the benefits, an increase of eight lakh from the running year. Similarly, allowances are being increased for widows and women left by husbands.
Read: Parliament gets Tk 336.14cr budget for next fiscal year
Their number will be 24.75 The allocation for this purpose would be Tk 1237.50 crore from the existing Tk 1230 crore.
Some 18 lakh insolvent disabled, 7.70 lakh poor pregnant women and 2.75 lakh poor lactating mothers will be put under the social safety net programme, said the sources.Transport workers who are affected by the pandemic will be included in the social safety net programme.
An amount of Tk 2500 crore has been earmarked for the affected transport workers.
Read: Sources: Agriculture to get increased subsidy in the upcoming national budget
Social welfare ministry sources said other social safety net programmes would be expanded and the ministry is working on it.
In the new budget the number of transgender, bede and underprivileged beneficiaries will be increased to 95,000.Prime Minister Sheikh Hasina has already provided financial assistance to some 36 lakh families who have been hit hard by the coronavirus pandemic and recent natural disasters.
Read: Prioritise health, education, agriculture in next budget: BNP
The families include 35 lakh low-income ones engaged in different occupations including affected transport workers. The remaining one lakh are farmers affected by recent natural disasters.Each of the 35 lakh families got Tk 2,500, while Tk 5,000 was given to each of one lakh farmer families.
The amount of allowance for the valiant freedom fighters of the country will also be increased.
The prime minister has already announced the allowance will be raised from Tk 12,000 to Tk 20,000 for the general category.
Read Freedom Fighters' allowance to rise by two-thirds from next fiscal