Resource mobilisation and expenditures

Upcoming budget to have a new classification system

Jasim Uddin Haroon | Published: June 02, 2018 09:30:42 | Updated: June 03, 2018 18:37:38


The upcoming national budget will be placed before parliament under a new classification system.

This will mark a departure from the old ways of presenting the same.

Finance Minister AMA Muhith is expected to place the budget at Jatiya Sangsad on June 07 next.

The new classification will give true pictures pertaining to expenditures and resource mobilisation, people familiar with the development told the FE.

They also said the new system will clearly highlight the liabilities of the government, which the existing budget structure fails to show.

The new classification has been prepared in line with the International Monetary Fund (IMF)'s Government Finance Statistics (GFS) manual (2014).

The system, a 56-digit chart from existing 13-digit, includes resource checking, regional resource distribution and quick analysis of budget features, a senior official at the finance division told the FE.

"This is a more detailed reporting system intended to comply with international budgeting practices," said Md Saiful Islam, deputy chief of Public Expenditure Management Strengthening Programme, funded by the Ministry of Finance.

The programme is technically being supported by the IMF.

Mr Islam also said, "This is a step towards attaining accrual basis of the accounting system in the public finance."

Bangladesh's accounting is cash-basis. The cash basis of accounting recognises the revenues when cash is received, and the expenses when they are paid.

This method does not recognise accounts receivable or accounts payable.

On transaction affairs, the budget usually had two heads: current expenditure and capital expenditure.

Under the new system, there will have four broad categories of expenditures such as capital expenditure, current expenditure, financial assets and liabilities.

On operational basis, the budget earlier had development and non-development expenditure.

Under the new system, non-development expenditures will no longer be there. It will be replaced by operating expenditures.

The operating expenditures will consist of four categories: general and administrative expense, special activity, support activities and local government transfer.

Development expenditures usually consist of annual development programme (ADP) and non-ADP.

But under the new classification, the ADP will consist of bloc allocation, study project, technical project and investment project.

And non-ADP will have food for work programme and transfer, special project and scheme.

On functional basis, Bangladesh's budget had no functional classifications. Under the new classification, there will be detailed functional basis in the next budget.

For instance, cadet college expenditure was showed under the Ministry of Defence. Under the new system, this will be shown as education expenditure.

Similarly, there are many health related expenditures which are usually showed as the expenses of the Ministry of Local Government, Rural Development and Cooperatives.

Under the new system, expenses meant for health purposes will be shown under health related expenses.

jasimharoon@yahoo.com

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