Overview of National Budget 2019 - 2020 MD. SHAHADAT HOSSAIN FCA - - PowerPoint PPT Presentation

• MD. SHAHADAT HOSSAIN FCA

Member Council -ICAB Dhaka – 16 June 2019

‘Overview of National Budget 2019-2020’

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OBJECTIVES

• The objective of this presentation is to have an
• verview about the impact of recently published

national budget of the financial year 2019-20 on macro economy of the country.

• This presentation has been prepared on the basis
• f publicly available sources i.e. daily news papers,

budget speech, website etc.

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Nature of Expenditure Budget 2019- 20 (TK in Crore) Revised Budget 2018-19 (TK in Crore) % of increase

Operating expenditure

311,507 269,092 16%

Development expenditure

211,683 173,449 22% 523,190 442,541 18%

Financing Revenue

377,810 320,399 18%

Loan

145,380 122,142 19% 523,190 442,541 18%

VOLUME OF BUDGET FOR THE FY 2019-20

Volume of the budget is 18% of GDP

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2019-20 2018-19 Comparison with budget (2018-19) Comparison with revised budget (2018-19) (Tk. in crore) % of increase/ (decrease) % of increase/ (decrease) Sources of financing Tax on Income & Profit 113,912 100,719 13% 20% Value Added Tax (VAT) 123,067 110,555 11% 17% Import Duty 36,498 32,553 12% 16% Supplementary Duty 48,153 48,766

• 6%

Other NBR revenue 3,970 3,608 10% 16% Total NBR Tax 325,600 296,201 10% 16% Tax other than NBR 14,500 9,727 49% 51% Revenue other than Tax 37,710 33,352 13% 40% 377,810 339,280 11% 19%

REVENUE COLLECTION

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PROPORTION OF DIRECT TAX AND INDIRECT TAX

Budget 2019-20 Budget 2018-19 Revised Budget 2017-18 Direct Tax 113,912 35% 100,719 34% 95,167 34% Indirect Tax 211,688 65% 195,482 66% 184,833 66% Total (NBR Tax) 325,600 100% 296,201 100% 280,000 100%

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AVERAGE MONTHLY DEFICIT OF TAX COLLECTION

Period Average monthly deficit (Tk in crore) July 2871 July-August 3637 July-October 4200 July-November 4395 July-January 4757 July-February 5142 July-March 5596

• Deficit of tax collection has increased month after month.
• Revised budget for NBR tax collection is Tk. 2,80,000 crore but upto

March 2019 collection was Tk. 153,477 crore. How far is it possible to collect of further Tk. 126,523 crore by next three months remain question?

• During the year 2017-2018, revised NBR tax collection was Tk. 225,000

crore but actual collection was Tk. 187,103 crore. Actual collection was 75% of original budget and 9% higher than the previous year’s collection.

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Foreign Donation 4168 4,051 3% 10% Foreign Loan 63,848 50,016 28% 47% Loan from Bank 47,364 42,029 13% 53% Loan other than Bank 30,000 29,197 3% (37%) Total 523,190 464,573 13% 18%

LOAN FINANCING

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LOAN FINANCING

 Foreign loan budget has been increased by 28% compared with previous year’s budget and 47% compared with the revised budget which is good step. In the year 2017-18, actual foreign loan (including donation) was Tk. 26,489 crore as against revised budget Tk. 46,024 crore i.e 58%.  Loan from saving certificates has been proposed to reduce and some ways and means like increasing tax has been mentioned.

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2019-20 2018-19 Expenditure (Tk. in crore) (Tk. in crore) Defence 29,067 5.6% 26,117 5.6% Pension & Gratuity 27,118 5.2% 26,046 5.6% Transport and communication 63,679 12.2% 55,405 11.9% Interest 57,118 10.9% 51,340 11.1% Local Government and Rural Development 37,884 7.2% 32,670 7.0% Social Welfare and safety 25,884 4.91% 23,799 5.1% Public Administration & Safety 26,793 5.1% 25,808 5.6% Education and Technology 79,486 15.2% 67,944 14.6% Public Administration 23,997 4.6% 14,611 3.1% Health 25,732 4.9% 23,393 5.0% Agriculture 19,359 3.7% 17,259 3.7% Subsidy and Incentive 33,459 6.4% 33,205 7.1% Fuel and Electricity 28,050 5.4% 24,920 5.4% Others 45,569 8.7% 42,056 9.1% Total 523,190 100% 464,573 100%

BUDGET ALLOCATION

EDUCATION

In the proposed budget of FY 2019-20 Tk. 79,525 crore i.e. about 3% of GDP and 15.2% of total budget has been allocated for education. Out of total budget for education sector 52% is for non-development

• spending. Budget for education and technology has

been increased by almost 17% compared with the previous years budget.

• Lots of proposal in the budget for increasing facilities

as well as improving quality education are available which is good initiative.

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HEALTH SECTOR

Total allocation for health sector is Tk. 25,636 Crore which is only 4.9% of total budget and 10% higher than the previous year's budget of Tk. 23,393 Crore. Budget for health sector is not sufficient at all. Two crore 60 lac people are suffering from malnutrition. Under this circumstances, budget allocation for health sector only 4.9% is not adequate.

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Major part of the workforce (40.6%) depend on minimum (13.61%) GDP contributory and low growth rate sector (Agriculture). Under this circumstances, agriculture sector has been given minimum budget allocation only 3.7% which is far behind than contribution to the GDP.

AGRICULTURE

INTEREST

• Total allocation for payment of interest is Tk. 57,070 crore which

is 10.9% of total budget and it is 11% more compared with previous year’s budget.

• Interest for foreign loan is Tk. 4,273 crore.
• Interest for Local loan is Tk. 52,797 crore.
• Total government liabilities as on 30th June 2018 was Tk.

353,423 crore (Savings Certificate Tk. 239,328 crore and Bank

• Tk. 114,095 crore). Average rate of interest is more than 13%

which seems to be high.

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SOCIAL SAFETY NET

• Total allocation for social safety net is Tk. 74,367 Crore

which is 2.58% of GDP, 13.92% of total budget and 15% higher than the previous budget.

• Both rates of benefit and number of beneficiaries have

been increased. For reduction of poverty level, it is undoubtedly a good step but special attention needs to be given for proper distribution.

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ADP IMPLEMENTATION

Budget for the Annual Development program (ADP) has been allocated for the FY 2019-20 Tk. 202,721 crore which is 17% higher than that of the previous year’s budget and 22% higher than the revised budget.

• Tk. 32,000 crore has been allocated for five preferred fast track

projects like Rooppur Power Plant, Metro Rail, Padma Bridge Matarbari Power Plant and Dohajari Rail Project. Sector wise highest allocation was for Transport sector Tk. 52,806 crore and second Hight for power sector Tk. 26,107 crore. In implementing ADP, the unique feature observed is that during first nine months of the year the implementation remains very poor and slow, in terms of expenditure. For example during the first ten months

• f FY 2018-19 (July–April) ADP has been implemented only Tk. 97,030

crore which is 55% of revised budget. Balance 45% equivalent to Tk. 79,590 crore has to be spent during the next two months. This happens almost every year. This practice may create scope of mis match of fund due to pressure

• n the fund.

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FOREIGN DIRECT INVESTMENT

FDI position of the country is, to some extent in increasing

• trend. During the year 2018, FDI received by the amount of

USD 3613.3 million which is 68% higher than that of the previous year. But it is also mentionable that despite having increasing trend of FDI, proposal for generating employment

• pportunity has decreased by 17%.

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INFLATION

Year Inflation 2014-15 6.4% 2015-16 5.9% 2016-17 5.4% 2017-18 5.8% 2018-19 5.5%

Inflation has been projected 5.5% for FY 2019-2020

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FOREIGN REMITTANCE

Year Foreign remittance (USD in million) 2005-06 4802 2006-07 5979 2007-08 7915 2008-09 9689 2009-10 10987 2010-11 11650 2011-12 12843 2012-13 14461 2013-14 14116 2014-15 15170 2015-16 14717 2016-17 12769 2017-18 14982 2018-19 (July-April) 13303

Two percent incentive has ben proposed for remittance through legal channel

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BALANCE OF TRADE

Year Million USD 2008-09 (4710) 2009-10 (5152) 2010-11 (9935) 2011-12 (9320) 2012-13 (7009) 2013-14 (6794) 2014-15 (6965) 2015-16 (6460) 2016-17 (9472) 2017-18 (11732) 2018-19 (July-April) (11928)

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DEFAULT LOAN

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POVERTY ALLEVIATION

No doubt that poverty level is improving year after year but the rate

• f poverty reduction compared with GDP growth is not consistent.

Last four periods information are :

Period Average Rate of GDP growth Rate of poverty reduction

2000-2005 5.7% 1.8% 2005-2010 6.1% 1.7% 2010-2016 6.6% 1.2% 2016-2018 7.6% 1.3% There are various reasons for which despite accelerated economic growth in recent years, there has been much slower progress in poverty reduction, these are, Slow employment generation due to

insufficient growth of private investment, poor public spending on education and health, getting inappropriate prices of agricultural products compared with production costs.

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EMPLOYMENT & ECONOMIC INEQUALITY

Total workforce in the country is 63.4 million out which employed workforce is 60.8 million. 2.68 million are completely unemployed. 6.58 million are engaged in temporary works. Main reasons behind such unemployment are, lack of sufficient private investment (23.4% of GDP): During last ten years private investment has increased by only 1 (one) percent. In the budget, GDP growth has been projected 8.2% which is undoubtedly attractive but despite having sufficient GDP growth, earlier the economic inequality has been widened year after year. To reduce unemployment and economic inequality following steps are mentionable.

• Establishment of 100 Economic zones to Generate one

crore employment .

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• Proposal to allocate additional fund for research and

development sector Tk. 50 crore.

• Proposal for pilot project for ‘crop insurance’
• Steps to increase Taxes zone from 31 to 63 for increasing

tax net.

• Some good initiatives to stop corruption.
• Enhancement of tax free dividend income from listed

company upto Tk. 50,000.

• Increasing budget allocation for social safety net.

EMPLOYMENT & ECONOMIC INEQUALITY

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