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The annual budget of the government is the most crucial fiscal event which has a bearing on the living conditions of all social groups. It is the main conduit of national resource mobilisation and management. Every year in June, the country receives its annual national budget for the upcoming fiscal year. After unveiling the budget by the man-in-change of national exchequer, different stakeholders scrutinise the various fiscal proposals placed in the budget. They also submit their suggestions and demands for the inclusion or exclusion of specific measures. Finally, the proposed budget receives approval from the parliament with or without some amendments. Thus, the proposed budget becomes the original budget.
Besides placing the budget proposal for the new fiscal year, the finance minister also declares a revised budget for the outgoing fiscal year. When the national parliament is operational in the country, he/she also presents a supplementary budget for the approval of the lawmakers.
The general trend in Bangladesh is to revise the proposed or original budget by reducing the original outlay. Ultimately, the size of the actual or implemented budget gets further reduced, mainly due to inefficiency in public spending, coupled with the wrong selection of development projects and inadequate mobilisation of resources. Budgetary decisions are primarily dependent on the availability of resources.
The government has been disclosing the status of the implemented or actual budget since FY09 in the budget document, specifically in the 'Budget in Brief.' This document provides a concise overview of the budget, including key figures and policy priorities. The practice brings some amount of transparency in the case of public spending disclosure and helps analysts and stakeholders get a more realistic picture of the budget.
In the first week of this month, the finance adviser to the interim government unveiled the national budget for the fiscal year 2025-26 (FY26). As there is no parliament in the country, Dr Salehuddin Ahmed, the finance adviser, delivered his budget speech via television and radio. Titled 'Building an Equitable and Sustainable Economic System', his speech nominally outlined the future direction of Bangladesh's economy.
Breaking the tradition of incremental budgets over the last five and a half decades, Salehuddin proposed an outlay of Tk 7.90 trillion for FY26, which is around one per cent lower than the original outlay of Tk 7.97 trillion for FY25. The proposed budget for the next fiscal year, however, is 6.20 per cent higher than the revised budget for the current fiscal year. Nevertheless, the modest increase over the revised budget is also a deviation from the long practice. For the last 15 years, since FY10, the proposed budget for the new fiscal year has shown a double-digit rise over the revised budget of the current fiscal year. Considering the high rate of inflation, the 6.20 per cent increase in the proposed FY26 budget over the revised FY25 budget is also not a hike, in real terms. The annual average rate of inflation stood at 10.13 per cent in May this year.
The reduced outlay of proposed public spending for the next fiscal year is a reflection of reality. During the last decade of the ousted Hasina regime, the annual average rate of hike in the proposed budget was 13.40 per cent. Most of the time, inflated outlay was proposed to widen the misappropriation and misuse of public money. The reduction in the proposed outlay for the next fiscal year could potentially lead to a more efficient allocation of resources, but it also raises concerns about the adequacy of funding for key sectors.
The finance adviser also delivered an abridged speech of around 7,000 words, whereas the original text contained around 17,000 words. The shortened version also helps viewers and listeners maintain their concentration.
Nevertheless, the unnecessary delay in making the budget documents public was a disturbing development, especially for analysts and the media. For many years, budget documents were made public when finance ministers began delivering their budget speeches. The practice is disrupted this time. The transmission started at 3:00 pm, and the finance ministry made the documents public after nearly an hour, without any apparent reason. The media personnel who gathered at the Ministry of Information to collect the budget documents also waited for an hour to obtain the documents. Despite repeated requests, the officials did not distribute the documents, quoting the official instruction to wait until the end of the speech. Over the years, journalists have been urging the government to announce the budget before noon. Regrettably, the Yunus-led interim government stuck to the previous timing of budget presentation.
True, the budget is not a panacea for all financial problems, though it is the most critical instrument of a government to manoeuvre public investment and development activities. In a democratic environment, the nature of the budget-making process should be more people-oriented, and policymakers should pay due attention to ensure that the expectations and aspirations of the people are reflected in the budget. According to some economists, public choice and democracy are interrelated, and the economic interpretation of democracy is that public wants and desires be entertained in the budget.
So, the budget process needs to be judged on the basis of (i) the constitutional obligations of the government, (ii) changes in the domestic political perspectives, and (iii) changes in the global economic environment. Like the previous finance ministers, the finance adviser also tried to comply with these three aspects.
Nevertheless, a budget is also not simply an annual financial statement of the government or a set of documents prepared by the bureaucrats, but rather a political tool which combines political decision-making with bureaucratic procedure. It is the numerical documentation of the government's political ideology, which is to be implemented through a suitable economic framework.
Over the last 16 years, it has been observed that the actual budget spending was, on average, 14 per cent lower than that of the original budget and 11 per cent lower than the revised budget, which is the budget that has been adjusted after the initial proposal to account for any changes or new information. Only the actual or implemented budget of FY11 was around 3 per cent and 1.5 per cent lower than the original and revised budgets of the year, respectively.
As the final implementation of the budget is generally lower than the proposed or revised outlay, it implies a structural weakness in the country's public expenditure system. This has led to some critical areas being deprived of due allocation or public investment, while some less important sectors are flooded with funds. The FY26 budget is a modest attempt to deviate from this trend. Its success, however, will depend significantly on the actions of the democratically elected government in the near future, underscoring the importance of their role in the budgeting process.