Download Budget Review 2008-09

Budget Review 2008-09
Budget analysis & review based
on economic justice and equity
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Budget Review 2008-09
The policy framework of Budgeting; Ignored the long term
development plan for short term populism
- Budget has prepared following the policy framework of PRSP
and so called market economy
- Government has been continuing the privatization process of
State owned Enterprises (SoE)
- Although the Government has emphasis the growth rather than
reducing discrepancies to eliminate poverty. But
- Didn’t increase the budgetary allocation among the basic
supportive factors (e.g. Education, Health, Investment and
Employment) for long term growth making.
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Budget Review 2008-09
The Financing opportunity of Budget
- Poor people will suffer due to inclusion of different new
areas under taxation and intensification
- Government has made a high ambitious projection to collect
the revenue of Taka 693820 million which may not be achieved
- The budget has been prepared depending of over burden of
loan. The deficit projection is 30.6% of total budget for the
fiscal year of 2008-09. But it was 22.7% in last fiscal year 200708.
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Budget Review 2008-09
The trend of deficit finance in Annual Development
Plan (ADP)
Fiscal Year
% of Deficit Finance
2007-08
2006-07
2005-06
2004-05
2003-04
65.05%
44.68%
49.77%
50.88%
49.23%
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Budget Review 2008-09
Resource allocation in Budget; A charity approach rather than
sustainable development.
- Government has increased the revenue expenditure
(non development expenses) amount of 7,25,840 million
which is 1,24,110 million higher than the fiscal year of
2007-08.
- ADP is allocated amounting 256000 million and it is less than
10000 million comparing the ADP of 2007-08.
- Debt servicing (17.3% of total budget) has crossed all the
allocation of service sector’s (e.g. Education 11.5%, Health
5.6%, Agriculture 4.7% and Electricity & Power 4.3%) budget.
- Allocation of Social Safety Net program (different subsidies for
poor) assumed logical, but it’s a “Charity Approach”. Because
there are no initiatives for sustainable employment for poverty
reduction in long term.
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Budget Review 2008-09
The objectives of this Budget 2008-09
- The budget doesn’t give emphasis in long term development
investment in agriculture & food security, electricity &
structural development that will support towards poverty
reduction and create sustainable employment .
- 75% of budget has been allocated in the following sectors,
- Salary & benefits have been increased for government
employee for keeping them satisfied.
- Subsidies in Social Safety Net has increased that’s treated
as virtually “Window Dressing approach” rather than poverty
elimination
That’s why government has tried to establish their revenue
expenditure as a development investment.
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Budget Review 2008-09
Some meseaurable impact of 2007-08 fiscal year budget
- There are more 2.5 million family in Bangladesh have gone
below the poverty line newly due to frequent price hike and
inflation.
- Government has taken loan amounting taka 373450 million
from domestic & foreign sources for budget implementation.
This amount is 5% of GDP and 154980 million higher
comparing the projected debt financing (tk 218470million) in
2007-08 fiscal year.
- Government has revised the ADP and cut off the allocation
40000 million due to slow pace of implementation. The
achievement of ADP implementation will merely not more than
40-50%.
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Budget Review 2008-09
A performance overview on budget implementation of different
ministry or sectors in 2007-08 fiscal year
- 26 no of ministry/sectors have used more resource than
proposed budget allocation
- 20 no of ministry/sectors didn’t able to used there allocated
resource in proposed budget
- Only one ministry/sectors (Ministry of Commerce) have used
100% allocated resource in budget
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Budget Review 2008-09
List of ministry/sectors used more resource
Ministry/Sectors Yearly allocation
Revised
allocation
+%
Establishment
72.1 million
77 million
8.08%
Defense
108460 million
118080 million
9.0%
Debt servicing
94640 million
106210 million
12.22%
Food & Disaster
39040 million
46270 million
18.5 %
Agriculture
43320 million
61000
40.8%
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Budget Review 2008-09
List of ministry/sectors didn’t able to use budgetary allocation
Ministry/Sectors Yearly allocation
Revised
allocation
-%
Education &
Technology
123700 million
116540 million
6.0%
Health & Family
Welfare
54700 million
52610 million
4.0%
Power & Natural
resource
45860 million
35850 million
22.0%
Local Govt. and
Rural Dev
67000 million
60710 million
9.5 %
470 million
280 million
40.5%
Monitoring &
Evaluation
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Budget Review 2008-09
Why this differentiate is happening in case of budget
implementation?
Process lacking in Budget preparation. e.g.
- Budget planning process is confined among some
bureaucrats. Because they prepare some so called
development project in every year and give traditional
increment.
- Budget doesn’t give long term emphasis on sustainable
employment creation and poverty elimination
- Budget preparation process doesn't ensure effective peoples
participation from local level and their problems and
acceptable solution
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Budget Review 2008-09
Undue intervention of donors in case of budgeting
- Targeting country’s yearly budget donors are prepare and
published some reports with recommendation according their
own style, those will virtually serve their own interest. e.g.
- World Bank has published an agriculture report on
Bangladesh, where they said that, Bangladesh can produce
Bio-fuel and import food through exporting.
- According this recommendation World Bank and IMF
pressurize government to privatization our agriculture sector
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Budget Review 2008-09
Transparency and Accountability is less in national budget. like
- Mid term and yearly progress and review report doesn’t
prepare from government part
- Annual Development Plan (ADP) implementation is slow pace
due to bureaucratic hassle.
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Budget Review 2008-09
Our proposal to reform the budget process
- Budget planning Bill have to submit in the national parliament
by December in every fiscal year. Parliament will decide the on
how the strategy will be for next fiscal year.
- The core problem have to identify before preparation of national
budget, and allocation along with specific and long term
solution have to ensure according that’s.
- We have to back to our “Five year economic plan” rejecting the
so called donor driven PRSP (Poverty Reduction Strategy
paper).
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Budget Review 2008-09
Our proposal to reform the budget process
- Accountability and Transparency have to be ensured in
national budget process and budgetary allocation. E.g.
- Pre budget statement have to circulate in public media where
mass are allow to through their comment
- Mid term and annual progress report have to prepare and make
to public.
- Budget allocation have to ensure district wise and addressing
their need and reality
- Government has to ensure district wise budget book that will
be open for mass.
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Budget Review 2008-09
Agriculture and Food Security; Endangering the food
sovereignty through importing GM under the name of food
security
- Government has been given emphasis the Hybrid and GM
(Genetically Modified) technology in our agriculture to increase
production that’s not a realistic solution in long term
perspective. Because this policy will may create vulnerability of
our poor farmers and loose their control on the land and inputs.
- There are no effective policy reflection and budget allocation in
national budget 2008-09 to save our agricultural land & quality,
use organic fertilizer and water utilization policy.
- Government has allocated the budget (2007-08 fiscal year) 3000
million for research but yet to be utilized.
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Budget Review 2008-09
Our proposal in Agriculture & Food Security
- Government has to prepare long term plan to ensure food
security through ensuring the rights of farmers on agriculture
land and inputs. That’s why,
- Budget allocation and subsidy to be provided to strengthen the
farmers supportive institutions like BADC (Bangladesh
Agriculture Development Corporation).
- Research have to be strengthen on hi yielding verities instead
of hybrid technologies which will ensure the farmers rights on
seed and market protection.
- Government have to provide necessary budget allocation to
save our agriculture land and surface water utilization.
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Budget Review 2008-09
Social Safety Net (SSN) and Subsidy
- In 2008-09 fiscal year, government has declared as subsidy
amount of taka 169320 million for SSN program and 136480
million for subsidy in fertilizer, fossil fuel and electricity.
This subsidies doesn’t allocated logically and it will virtually
increase the inequality. Because,
- If subsidy in SSN program assume logical in our country
perspective, but increasing subsidy reflecting the frequent
pauperization of our people and poverty. This also a paradigm
of frequent failure of our government policy & approach in
reducing the poverty.
- Subsidy is also a charity approach and denial the citizen rights
of living with dignity and sustainable income opportunity. This
approach and policy never be a proven & effective tool of
reducing poverty.
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Budget Review 2008-09
- Secondly; the beneficiaries of fossil fuel and electricity
subsidies are mostly rich and middle class people. Because
rich people are using the cent percent of electricity rather poor
and farmers. and
- The bus & transport owners, private car owners, government
bureaucrats and foreigners they are the mostly beneficiaries of
fossil fuel subsidy.
- Our poor people and farmers they are only use the fossil fuel
and electricity for their agriculture and irrigation and merely
benefited.
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Budget Review 2008-09
Our proposal in SSN & Subsidy
- Government will have to withdraw the subsidies from fossil
fuel and electricity.
- Only for selected agriculture purpose, subsidy will be provided
where poor farmers will be benefited.
- To reduce fossil fuel consumption, our public transport
network system have to be strengthen and subsidy budget to
be allocated.
- Government have to imposed increasing rate of tax on lavish
electric home appliances, ban high cc car import.
- Subsidy have to allocated on using solar system as alternative
power and energy saving bulb
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Budget Review 2008-09
Investment and Employment
- Government has try to encourage the domestic investment
revised the tax rate in 2008-09 fiscal year. e.g.
- Tax reduce from 5 to 3% on capital machineries import
- Raw material import tax from 10 to 7%.
But this encouragement will may not create any significant
impact to enhance the domestic investment. Because there are
multidimensional factors working for domestic investment raise.
i.e.
- There are no structural and physical facilities in rural area in
Bangladesh
- Limited gas and electricity facilities suffering existing local
industries
- There are no market protection policy for local entrepreneurs
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Budget Review 2008-09
Our proposal in Investment and Employment
- Government have to be allocated the budget for physical and
structural development and ensure logistic support in rural
area to increase the domestic investment and employment .
- Logistic support (gas, electricity and others) have to ensure
with subsidized price those who will invest in rural area
especially district and upazila (sub district) level.
- Government have to ensure market protection for local
industries and entrepreneurs direct or indirectly. e.g.
- Strengthen the BSTI (Bangladesh Standard &Testing
Institution) for quality ensure
- Introduce the certification system
- Strengthen market research activity and have to ensure
necessary information
- Strengthen Countervailing tax system
- Government have to declare the yearly employment target in
national budget and make to public as quarterly basis.
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Budget Review 2008-09
Budget and Human Resource (Education and Health)
development
- Government has allocated an amount taka 122580 million (1.9%
of GDP) for education and 58620 million (0.95% of GDP) for
health in 2008-09 fiscal year.
- This allocations are decreasing comparing with following,
- In last fiscal year (2007-08) budgetary allocation for
education was 2.15% of GDP and for health, it was 1.2% of
GDP.
- According to government report, the inflation rate is 14.7%. If
it adjusted the purchasing power of this new budget
allocation is negative.
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Budget Review 2008-09
Budget and Human Resource (Education and Health)
development
- Government didn’t give any emphasis and specific direction in
national budget for strengthening the vocation education for
drop out students in secondary and higher secondary level.
- Government has taken an initiative (“Hospital Autonomy Bill2007”) privatization of health sector. This privatization already
speed up through World Bank support and handing over of 15
hospital, 300 community clinic to private sector.
As result poor people don’t have any accessibility and will
deprive from health service.
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Budget Review 2008-09
Our proposal for Budget and Human Resource (Education and
Health) development
- Government have to increase budget allocation at least 5% of
GDP in education and health sector each.
- Budget allocation have to provide to introduce the vocational
trade course at secondary and higher secondary level. If drop
out happen in this level, students will get opportunity of
employment through utilization of their knowledge and skill.
- Government have to suspend the so called “Hospital Autonomy
Bill-2007” and all hospital and community clinic management will
have to hand over to local government instead of private
ownership.
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Budget Review 2008-09
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