Bangladesh government made significant progress towards meeting international requirements in fiscal transparency, but it still fell short of the minimum standard, says a new report released by the US. The 2022 Fiscal Transparency Report says that fiscal transparency informs citizens how government and tax revenues are spent and is a critical element of effective public financial management. The report was released yesterday (September 9, 2022). Fiscal transparency provides citizens a window into government budgets and those citizens, in turn, hold governments accountable. It underpins market confidence and sustainability. Also read: Fiscal policy support needed for economy to tackle inflation: CPD The government of Bangladesh did not meet the minimum requirements but made significant progress in fiscal transparency, the report said. Since 2008, in consultation with other relevant US agencies, the Department of State has conducted fiscal transparency assessments of governments that receive US foreign assistance. The Fiscal Transparency Report reviews efforts by 141 governments (and the Palestinian Authority) to meet the minimum requirements of fiscal transparency; assesses those governments that did not meet the minimum requirements; and indicates whether governments that did not meet the minimum requirements of fiscal transparency made significant progress toward meeting the requirements. Read How to safely send remittance to Bangladesh? How to improve the fiscal transparency of Bangladesh? The US report says Bangladesh’s fiscal transparency can be improved by: — Preparing budget documents according to internationally accepted principles. — Ensuring that the supreme audit institution meets international standards of independence and has sufficient resources. — Publishing timely audit reports that contain substantive findings, recommendations, and narratives. — Making basic information about natural resource extraction awards public and consistently available. Read Hope amidst forex crisis: Bangladesh received $2.03bn remittance in Aug During the review period, the government made significant progress by publishing its end-of-year report within a reasonable period. It also made its executive budget proposal and enacted budget widely and easily accessible to the public, including online. Information on debt obligations was publicly available. Budget documents provided a reasonably complete picture of the government’s planned expenditures and revenue streams, including natural resource revenues. Financial allocations to and earnings from state-owned enterprises were included in publicly available budget documents. Also read: Universal Pension Scheme from new fiscal year Information in the budget was considered generally reliable, although budget documents were not prepared according to internationally accepted principles. The government’s supreme audit institution reviewed the government accounts, but its reports did not contain substantive findings and were not made publicly available within a reasonable period. The supreme audit institution did not meet international standards of independence. The government specified in law or regulation and appeared to follow in practice the criteria and procedures for awarding natural resource extraction contracts and licenses. Read Bangladesh receives $2.09 billion remittance in July; highest in 14 months Basic information on natural resource extraction awards was not consistently made available to public. 2022 Fiscal Transparency Report (Full): https://www.state.gov/fiscal-transparency-report/.

The government's debt, that is the country's sovereign debt, is projected to reach Tk 16,306.5 billion in the next 2022-23 fiscal, before growing to Tk 18,732.30 billion in 2023-24. According to an official document, the sovereign debt is Tk 13,919.5 billion for the running 2021-22 fiscal. In the 2023-24 fiscal, the government will get Tk 11568 billion from domestic sources while Tk 7164.30 billion from external sources. In the 2022-23 fiscal, the government will get Tk 10021.70 billion from domestic sources while Tk 6284.80 billion from external sources. In the running 2021-22 fiscal, the target was Tk 8674 billion from the domestic sources while Tk 5272.50 billion from external sources. Also read: Bangladesh’s foreign debt far below risk limit: Economic review tells PM In the 2020-21 fiscal’s revised budget, the debt was Tk 12037.70 billion with Tk 7489.20 billion domestic debt and Tk 4548.5 billion external. The government's debt in 2019-20 fiscal was Tk 10062 billion where the domestic debt was Tk 6313.7 billion and external was Tk 3748.30 billion.  The document said that the government debt has been projected to edge up in the medium term in line with the pace of economic recovery. Outstanding debt is projected to increase by 1.3 percentage point of GDP to Tk. 13.9 trillion (Domestic vs. external ratio 1.6:1) at the end of fiscal 2021-22 from the revised target of fiscal 2020-21, as additional budget will be required for the health sector, including the cost of carrying out the vaccination program and implementing the declared stimulus packages.  Government debt has been projected to rise in the subsequent years as the economic recovery path might be slow due to the advent of new variants of the COVID-19.  Also read: No chance of Chinese debt trap: FM The government debt has been projected to 42.9 percent of GDP at the end of fiscal 2023-24 where domestic debt is 26.5 percent of GDP and external debt is 16.4 percent of GDP. The projection is 42.1 percent of GDP at the end of fiscal 2022-23 where domestic debt is 25.8 percent of GDP and external debt is 16.2 percent of GDP. The official document mentioned that additional government spending for implementing the declared fiscal stimulus package to foster economic recovery from the pandemic as well as weaker than expected revenue collection have been pushing up the government debt level slightly. Considering the present trend in the revenue collection and the resulting fiscal deficit, total debt stock is projected to increase by 2.2 percentage point of GDP to Tk. 12.0 trillion in the revised budget from the original budget in FY21 where both domestic debt and external debt level rises by 1.1 percentage point. As per the document, high GDP growth, stringent fiscal discipline, low interest cost that resulted from optimum borrowing mix, and stable exchange rate have contributed in stabilising government debt over the decade (fiscal 2010-11 to fiscal 2019-20).  Government's outstanding debt hovered around 35-36 percent of GDP during the decade.  It actually declined until fiscal 2017-18, but then the trend was reversed and the debt stood at 36.0 percent of GDP at the end of FY20.  Composition of the debt stock has changed as well in the last ten years.  Domestic debt increased gradually to 22.6 percent of GDP at the end of fiscal 2019-20 from 16.7 percent of GDP at the end of discal 2010-11.  External debt has declined gradually to 13.4 percent of GDP at the end of fiscal 2019-20 from 18.3 percent of GDP at the end of fiscal 2010-11.

Finance Minister AHM Mustafa Kamal has said that he is hopeful that the country’s remittance will exceed $25 billion by the end of the current fiscal , up from current $21 billion. “During the two occasions of Eid, we hope our expatriates send huge remittances that will help exceed the last fiscal year’s benchmark”, he told reporters while briefing the outcomes of the consecutive meetings of the two cabinet Committees—Cabinet Committee on Public Purchase and Cabinet Committee on Economic Affairs on Monday. The finance minister noted that in the last fiscal 2020-21, the country’s remittance reached nearly $25 billion. Also read: Bangladesh Bank allows receiving remittances through OPGSPs He admitted that all the economic indicators of the country remained positive except the remittance. “We’re lagging behind our expectations in remittance earnings. But two Eid festivals will play a big role in boosting the remittance”, he added. Kamal also claimed that he is still hopeful that the country will achieve the 7.2 percent economic growth as all the sectors are performing well although the International Monetary Fund (IMF) recently made a projection at 6.6 percent in this regard.   "The IMF and the World Bank always make conservative projections, but our projection finally sustained”, he said. The minister said the export has made 24.3 percent growth and by the end of the current fiscal the total export earnings will reach $47-$48 billion. He said the country holds huge potentials to grow economically, but those potentials were not utilized in a right manner. Also read: ‘No idea who’re siphoning off money; give me a list’: Finance Minister “In last 12 years, under the leadership of Sheikh Hasina, we have been able to exploit such potential. That’s why we have succeded”. Responding to a question, he said the government prefers the local companies in the contract of supply of electronic devices in the public purchase. “We want to promote the Made in Bangladesh products in the public procurement”, he said.

Although the government has shrunk the percentage of expenditure on pay and allowances of the public servants against the total budget in the running fiscal, it will be back  from fiscal 2022-23. Likewise, the government spending on goods and services will see slight slowdown in the next fiscal, but witness rise from fiscal 2022-23. According to an official document, the projection of expenditure on pay and allowances of the public servants is 12.4 percent against the total budget, which is Tk 814.3 billion, while it will be 12.5 percent, which is Tk 925.2 billion. Expenditure on Pay and Allowances was 13.8 percent of the total budget in 2014-15 fiscal, which was Tk 288.2 billion. Also read: Govt focuses on less current expenditure and increased capital spending: official document However, the document stated that a little upswing was noticed in 2015-16 (16.7 percent, which was Tk 400.5 billion) that continued till 2016-17 fiscal (18.2 percent which was Tk 490.4 billion) due to the introduction of a new pay scale by the government. It was reduced to 14.8 percent (Tk 478.5 billion) and 13.6 percent (Tk 534 billion) of total expenditure during fiscal 2017-18 and fiscal 2018-19. Likewise, it has further been reduced to 12.2 percent which is Tk 656.1 billion in the revised budget of 2020-21 fiscal while it was 12.7 percent or Tk 569 billion. It is expected to remain at the same level in the medium term (2023-24 fiscal). In the fiscal 2021-22 expenditure in pay and allowances is 11.8 percent of the total budget, which is Tk 713.5 billion. The document said that the expenditure on goods and services as a percentage of total expenditure remained around 7 percent during fiscal 2016-17 to fiscal 2019-20. In 2015-16 fiscal and 2016-17 fiscal it was 7.6 percent or Tk 182.1 billion, and 7.6 percent or Tk 205.5 billion respectively. In 2017-18 fiscal and 2018-19 fiscal the expenditure was 7.3 percent or Tk 234.8 billion and 73 percent or Tk 285.7 billion. In 2019-20 the percentage was dropped to 7 percent while the amount was Tk 289.8 billion. To keep this outlay within a comfortable range through budgetary process, government has taken several measurers that includes enhanced transparency of transfer through e-GP and improved public procurement management. Also read: Govt targets 17% expenditure of GDP for next two fiscals: Document The expenditure was 6.3 percent for fiscal 2020-21, which was Tk 337.7 billion. In the medium term, the allocation on these heads has been estimated to follow a steady trend. In 2021-22 fiscal the amount is estimated at 6.2 percent of total expenditure, which is Tk 373.4 billion, while in 2023-24 fiscal this will be 6.6 percent or Tk 488.8 billion and Tk 426.5 billion or 6.5 percent of the total budget for 2022-23 fiscal. Amid the coronavirus crisis, the government had taken up a comprehensive plan with four main strategies. These are: discouraging luxury expenditures, prioritising government spending that creates jobs, creating loan facilities through commercial banks at subsidised interest rate for the affected industries and businesses, and expanding the coverage of the government’s social safety net programmes. Public expenditure broadly includes all government consumption, investment and transfer payments. Current expenditure and capital expenditure are the two major categories of budget allocation. Current expenditure consists of wages and salaries paid to the government employees, purchase of goods and services, subsidy and transfer payments and interest paid for domestic and foreign loans. Expenditures of account of 'food account operation' also includes into current expenditure category. On the other hand, capital expenditure comprises addition to and creation of productive assets. The Annual Development Programme (ADP) and non-ADP capital expenditure are the two major categories of capital formation through government expenditures. Moreover, capital expenditure includes loans and advances, development programme financed from revenue budget, non-ADP project, and non-ADP FFW (Food For Work) and transfer. Considering the context of developing countries like Bangladesh, expanding the size of current expenditure is important for improving the quality of public service delivery and meeting the demand for maintaining the existing infrastructure network. On the other hand, growth of capital expenditure is desirable to meet the growing demand for public investment.

The government allocation for public expenditure on goods and services will witness a significant rise in the coming years after a slight dip in the last couple of years. The government has estimated to spend Tk 401.3 billion, which is 6.6% of the budget, for public expenditure in the coming 2021-22 fiscal. The country is likely to get Tk 5933.14 billion budget for 2021-22 fiscal, Tk 253.14 billion higher than the running one, aiming to face the COVID-19 pandemic challenge for recovering the economy. Read BSMMU announces Tk 602.73cr budget for FY 2020-21 The estimation for 2022-23 fiscal has been set at Tk 465.2 billion, which will be 6.7% of the budget. According to an official document, the allocation for the purpose in the running 2020-21 fiscal is Tk 350 billion or 6.1% of the budget. The document also reads that the government has estimated to bring down its expenditure in current account, including purchase of product and service, while increase the capital expenditure in the next two fiscals. It said that the current expenditure for 2021-22 and 2022-23 fiscal has been estimated at 54.4% and 54.5% of the total budget respectively. Also read: Spending on public servants' remuneration to witness uptick from next fiscal As per the document, the government allocation for expenditure can be divided in current expenditure and capital expenditure. Salaries and allowances of government employees, purchase of product and service, compensation and relocation expenses, payment of interest against foreign and domestic loans - these are all found under the current expenditure category. Besides, ‘food accounts’ and ‘expense for structural coordination’ are also under this expenditure. On the other hand, capital expenditure is spending that leads to the creation of new productive assets and inclusion. It is akin to investment, so government-funded projects and project components in the annual development programme (ADP), as well as non-ADP capital expenditure are the two main categories for capital expenditure. Also read: Stop unnecessary expenditure of public money: PM Besides, loans and advance payments, development programmes from revenue budget, projects outside the ADP and non-ADP Food for Work programme and handover expenses fall under this expenditure. The document stated that in the revised budget for the 2019-20 fiscal, the allocation for public expenditure on products and services was Tk 322.1 billion, that is 6.5% of the budget. It also mentioned that in 2018-19 fiscal the allocation was Tk 285.7 billion which was 7.3% of the budget that year. In four previous fiscals i.e. 2017-18, 2016-17, 2015-16 and 2014-15 respectively, the allocations were Tk 234.8 billion (7.3% of budget), Tk 205.49 billion (7.6%), Tk 182.05 billion (7.6%) and Tk 166.27 billion (8%). Read 'Unimplementable' budget to cause public sufferings: BNP The document said that from 2014-15 fiscal to 2018-19 fiscal the allocation for public expenditure in product and service was near about 8%. Due to various government steps, like enhancement of transparency through introducing E-GP, development in public procurement management and others, the allocation for this sector can be delineated     in the government budget process, the document said. Meanwhile, amid the Coronavirus crisis, the government is working according to what it believes to be 'a comprehensive plan' with four main strategies. The 4-pronged  strategy entails discouraging luxury expenditures, prioritising government spending that creates jobs, creating loan facilities through commercial banks at subsidised interest rates for the affected industries and businesses, and finally expanding the coverage of the government’s social safety net programmes.  Read Govt aims to rein in budget deficit back within 5% from next fiscal

Bangladesh hopes to achieve a 15% growth in export earnings this fiscal, with the economy showing resilience to come out of the economic downturn caused by the pandemic and the government hinting at another stimulus package in view of a second wave of Covid that has already hit Europe.