Bangladesh National Budget 2012-2013 will be placed on June 7 worth Taka 1.90 Trillion

Bangladesh National Budget 2012-2013 will be placed on June 7 worth Taka 1.90 Trillion

Bangladesh National Budget 2012-2013 will be placed on June 7 worth Tk 1.90 Trillion

Bangladesh National Budget 2012-2013 Fiscal Year

Finance minister Abul Maal Abdul Muhith will present the Bangladesh national budget for 2012-13 fiscal year in parliament on Jun 7 through a computer PowerPoint presentation. Parliament would pass the budget on Jun 28 after holding discussion. Size of the budget for next fiscal 2012-13 year will be Tk 1.90 trillion, of which Tk 54,000 crore is meant for development programmes. The current budget 2011-2012 is worth around Tk 1.63 trillion.New budget 2012-2013 will be increased by 17%, making it gigantic at nearly Tk 2 trillion.

With this new budget 2012-2012, government will try to control the inflation, which is on high rise due to the global economic meltdown. Average inflation rate in the current fiscal was just above 10% and the new budget hopefully minimize it to single digit. The last budget 2011-2012 envisaged the average inflation rate within 7.5 percent. But according to a recent Bangladesh Bureau of Statistics (BBS) report published in April, the general inflation topped 10 percent in March, 2012.

Finance minister Abul Maal Abdul Muhith will present the Bangladesh national budget for 2012-13 fiscal year in parliament on Jun 7 through a computer PowerPoint presentation.

The energy and power sector will get the highest priority in the next budget, followed by human resources development, education, health, social security and communications sectors. Government has taken the challenge of forming the new budget in such a way that, by 2012, the total power generation will go up to 15,000 megawatts. But there will be less new development programmes in the next budget as the already government received large foreign loans worth US $ 5.1 billion last year.

Sources also hinted at cuts in subsidy in the new budget 2012-2013. That means oil prices will be adjusted with international market as Bangladesh depends on fuel import. This will eventually increase the oil prices which is currently on lower side comparing to the international market. Moreover, IMF wants an increase in the fuel oil price in this 2012-2013 fiscal, for a loan of $ 1 billion Bangladesh will receive from the global lender under its Extended Credit Facility (ECF). Seems like IMF conditions will be implemented in the next fiscal include limiting budget deficit to five per cent of GDP, adjusting fuel oil price with international rate by first half of the fiscal, reducing tax concessions and exemptions to 0.5 per cent of GDP.

2012-13 budget will also retain provision for ‘whitening black money’, as the government admitted that it is not easy to plug the sources of unaccounted money despite knowing it. Actually government is not in favor of facility for whitening black money, but as we have seen that the government has to compromise with many things. Current government offered opportunity to whiten unaccounted money in its first budget for 2009-10 fiscal. The budget 2010-11 fiscal year excluded the provision, but it was reintroduced in 2011-12 budget by giving an opportunity to whiten black money by investing in the capital market. Government seems to be in back foot blocking the black money, rather interested to use it in development works. Though the usage of this money should be closely monitored. Black money becomes a topic of debate almost every year before the announcement of the national budget. The BNP-led governments from 1991 to 1996 and from 2001 to 2006 also legalized black money.

Budget 2012-2013 will target the economy to grow at 7.3 percent (GDP growth). Current 2011-2012 fiscal years GDP growth rate target has been forecast at 7 percent, which is very unlikely to achieve as per current economical and political situation of the country. GDP projections from the ADB saw growth in Bangladesh declining to 6.2 per cent, and those from the IMF forecasts growth rates as low as 5.5 per cent in the coming fiscal year, down from 6.7 per cent in 2011. Check the World Bank forecasts on 2012-2013 fiscal GDP for Bangladesh -

GDP Forecast 2012-2013 for Bangladesh by World Bank

GDP Forecast 2012-2013 for Bangladesh by World Bank

Despite assurance of US $30 crore as budget assistance from Asian Development Bank (ADB), the new national budget 2012-2013 is in intense pressure due to pressure of huge subsidies. The remaining subsidies of Tk 10 thousand crore for current fiscal year has already been transferred to the next budget to coup up with the pressure and it is not enough to make up for the next budget. IMF also agreed to finance for new budget assistance.

The government has expressed firm commitment to achieve food security by 2013. Therefore, the next budget will have to play a vital role in attaining this goal. Finance Division data reveal that 52% of ADP of the ministry of agriculture had been implemented up to February, which is a clear improvement over the last fiscal year. Agricultural performance hinges crucially on adequate and timely supply of inputs at reasonable price. In the last few years, the fertilizer crisis was mitigated but the problem of quality seeds and irrigation still remains. Bangladesh Agricultural Development Corporation (BADC) and its affiliates can supply only up to 26% of the demand for seeds, the rest comes from domestic private sector and imported hybrid varieties. It is important to ensure that agricultural credit is reaching in time and adequately to the small and marginal farmers, who are critical in increasing food production. In the first seven months the overall agricultural credit disbursement shows a negative pattern (-0.56%), while disbursement was reduced significantly in the rural non-farm sector (-30.66%) compared to the last fiscal year. This could lead to underinvestment in agriculture and hamper the sectoral growth. However, credit from banks usually takes time due to paperwork and bureaucratic hurdles, which leads farmers to borrow money from informal money lenders and input suppliers. Policymakers must look into this matter carefully.

Government emphasized the importance to infrastructure improvements rather the development of new infrastructure projects in the new budget 2012-13. At this moment, there are 2,100 kms of road in Bangladesh and it’s important to upgrade existing roads and highways rather than construct new highways.

The government has to fulfill the expectation by coordinating the ability of the people in the next budget 2012-2013. Though the new 2012-13 budget would be very critical due to the present economic and political scenario. The government will have to face challenges due to the high expectation in the new budget. Resource management will be a big challenge for the government.


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4 comments

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  1. MD.ZAKER HUSAIN
    MD.ZAKER HUSAIN 14 May, 2012, 13:14

    Honorable Finance Minister seems to be over optimistic.He always likes to place overambitious budget in every fiscal without ignoring the reality and the real capability of his ministry.This is going to be the bad habit of this ministry.

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  2. hasan
    hasan 3 June, 2012, 09:36

    It seems that our ministers dont care about the necessary things. In education sector, the lecturers joined in the mpo enlisted colleges in vacant post after may 2011 are not getting salary. Their salary is not being started. But previously it declared 6 times a year. And the joined teachers did not face any delay starting their salary. Now they are dying but who cares? Bogus budget! They are merely cheating to the people.

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  3. hasan
    hasan 3 June, 2012, 09:46

    This is not all, even we mass people do not have any access to say anything about the budget. The matter of not allowing the salary to the lecturers joined in the MPO enlisted colleges in vacant post from may 2011 till now is ignored because we have no way to urge our claim. There is no direct mail address to those ministers. So this budget will also fail to fulfill the demand of mass people if there is no scope to deliver the speech of mass people.

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  4. Ali Ahmed
    Ali Ahmed 3 June, 2012, 10:35

    The commentary supplies some valuable information, no doubt. But it seems the commentator avoided any comment on the achieve-ability of the rather high GDP growth target of 7.3% in the fiscal year 2012-13. No estimate has been placed of the amount of investable funds to achieve that growth. It is not only a question of availability of such a huge investible fund in the face of a rather shy FDI situation in the country. The govt. has also identified infrastructure building as a precondition for FDI and development in general. But in the fractious political climate of the country, it is highly unlikely such a huge fund will pour in to the country. So the dream of reaching a Middle Income Country Status by 2021 may remain only a slogan even if there is a change in political power at the top. When will the politicians understand this?

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