Introduction to Bangladesh's National Budget Analysis of FY 2022-2023 The National Budget Analysis of Bangladesh for the fiscal year 2022-2023 provides valuable insights into the country's financial plans and priorities. This comprehensive analysis aims to examine various aspects of the budget, including revenue collection, expenditure allocation, inflationary pressures, sector-specific measures, and the overall impact on businesses and the economy. By delving into the key highlights and policy measures outlined in the budget, we gain a deeper understanding of the government's strategies to address economic challenges, promote growth, and ensure sustainable development. Through this analysis, we aim to shed light on the significant elements of the budget and their implications for various stakeholders, ultimately contributing to a better understanding of Bangladesh's economic landscape and future prospects.

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Topic: Bangladesh’s National Budget Analysis of of FY 2022-2023.
Introduction:
The Bangladesh government presented its national budget for the fiscal year 2022-2023 on June 3, 2022.
The budget, which amounts to Tk 7.62 trillion (approximately USD 90 billion), is aimed at achieving a high
growth rate and reducing poverty in the country. In this budget analysis, we will analyze the key economic
trends and patterns that have been identified in the 2022-2023 budget.
The 2023 budget of Bangladesh has been a much-awaited event for policymakers, investors, and citizens
alike. With the country recovering from the impacts of the COVID-19 pandemic, there has been a growing
focus on economic growth and development, and the budget is expected to play a critical role in driving
this agenda forward. In this report, we provide an in-depth analysis of the 2023 budget of Bangladesh,
with a particular focus on the economic issues and trends that are likely to shape the country's economic
landscape over the next fiscal year.
This analysis examines the key drivers of economic growth and development in Bangladesh, including the
performance of key sectors such as agriculture, manufacturing, and services. We also analyze the impact
of external factors such as global trade and investment flows, and the potential implications of changing
political and policy landscapes on the country's economic outlook.
Moreover, the report delves into the budget's allocation for key sectors, including education, healthcare,
infrastructure, and social safety nets. It assesses the government's priorities in these areas and evaluates
the potential impact of these investments on the country's economic and social development.
In summary, this report aims to provide a comprehensive analysis of the 2023 budget of Bangladesh,
focusing on the economic issues and trends that are likely to shape the country's development trajectory
over the next fiscal year. The report will be of interest to policymakers, investors, and citizens seeking to
understand the key drivers of economic growth and development in Bangladesh and the potential
implications of the budget for the country's economic and social welfare.
History:
The National Budget is an annual financial statement that outlines the estimated income and expenses of
the Government of Bangladesh. It is a mandatory task under Article 87.(1) of the Constitution. The first
budget was presented in 1972 by Tajuddin Ahmad and amounted to ৳786 crore (US$84 million). Since
then, there have been 51 national budgets, with former Ministers of Finance AMA Muhith and Saifur
Rahman presenting 12 budgets each. The 2022 budget marks the 23rd budget presented by an Awami
League-led government in Bangladesh's history.

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Significant announcements:
• The current year's budget shows total expenses of ৳678064 crore (US$72 billion), which is an
increase of ৳74383 crore (US$7.9 billion) (12.32%) compared to the previous fiscal year. Out of
this amount, ৳431998 crore (US$46 billion) is set aside for operating and other expenses, while
৳246066 crore (US$26 billion) is allocated for the Annual Development Programme.
• The budget sets the total revenue collection at ৳433000 crore (US$46 billion), with ৳370000 crore
(US$39 billion) expected to be collected by the National Board of Revenue and the remaining
৳63000 crore (US$6.7 billion) from non-NBR and other sources.
• The budget projects a total GDP growth rate of 7.5%, resulting in an estimated total GDP of
৳4450000 crore (US$470 billion).
• The budget has a total deficit of ৳245064 crore (US$26 billion), which is equivalent to 5.5% of
GDP, showing a 0.7% decrease from the previous fiscal year. The government plans to finance the
deficit through a combination of domestic and external sources.
• According to the Finance Minister, the projected average inflation rate is 5.6%. He attributed the
rising inflation to external factors beyond the control of the government such as the increase in
oil prices, depreciation of the Taka against the US dollar, inflation increase among trading
partners, disruption of the global supply chain, and the conflict between Russia and Ukraine. The
government has promised to make efforts to control inflation and provide relief to the public.
• The Finance Minister declared a new policy that authorizes Deputy Commissioners of Taxes to
terminate utilities, like electricity, water, and gas supply, to businesses that intentionally avoid
paying their taxes.
Economic context:
Bangladesh's economy has experienced significant growth and development in recent years, driven by
robust performance across key sectors such as manufacturing, agriculture, and services. Despite facing
the challenges posed by the COVID-19 pandemic, Bangladesh's economy is expected to continue its
growth trajectory, with the government forecasting a GDP growth rate of 7.2% for the fiscal year 2022-
23.
One of the key drivers of Bangladesh's economic growth has been the country's export-oriented
manufacturing sector, which has seen significant investments in recent years. The sector has been a major
source of employment and foreign exchange earnings for the country, contributing to a growing middle
class and increasing levels of consumer spending.
Inflation has remained relatively stable over the past year, with the government's inflation target set at
5.5%. However, the recent rise in global oil prices and supply chain disruptions caused by the pandemic
could put upward pressure on inflation in the coming months.
The country's labor market has also shown signs of improvement, with the unemployment rate falling to
4.1% in 2021 from 4.5% in the previous year. However, the labor force participation rate remains low,
particularly for women, indicating that there is still room for improvement in the country's labor market.

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The government's efforts to increase public investment in key areas such as infrastructure, healthcare,
and education are expected to continue in the 2023 budget. The budget is also likely to focus on
strengthening the country's social safety nets and addressing the needs of vulnerable populations.
Overall, Bangladesh's economy has shown resilience in the face of the pandemic and is expected to
continue its growth trajectory in the coming years. The 2023 budget is expected to support this growth
by targeting key sectors and addressing the country's pressing economic and social needs.
Construction of the Budget:
The national budget is a complex plan that outlines expenses and sources of revenue. Given the
challenging global economic conditions and our reliance on imports, this year's budget prioritizes careful
spending and aims to achieve an ambitious revenue target.
Budget Overview:

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Composition of Expenditure:
Table 1: The following table shows the variation in the allocation of budget for different sectors from
the fiscal year 2021-2022 to the fiscal year 2022-2023.
The total public expenditure of BDT 6.78 trillion has increased by 14.2% compared to the previous budget.
Public services, education and technology, and transport and communication continue to receive the
highest allocation of funds, with a 21%, 14%, and 24% increase in budgeted expenditures respectively
compared to the revised budget for 2021-22. The agriculture sector has been allocated 6.2% of the total
expenditure, while the health sector has been allocated 5.4%, both receiving a 20% and 14% increase
respectively from the previous budget. Interest payments have seen a 13% increase in allocation. On the
other hand, Social Security and Welfare have only been allocated 5.5% of the total budget expenditure
with a small 4.7% increase. The Energy and Power sector has seen a 6.3% increment. A breakdown of the
current and previous budgetary allocations for all sectors is provided.
2
2
0
0
2
2
2
0
0
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a e in
Budget FY22 2
a e in
e ised Budget FY2 22

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Source: Analysis conducted by the Center for Policy Dialogue (CPD) on the National Budget for the fiscal
year 2022-23.
Looking at expenses from a different perspective, they can be divided into two categories: operating
expenses and development expenses. Of the total expenditure, 60.6% or BDT 4.32 trillion was allocated
for operating expenses, while BDT 2.46 trillion or 36.3% was earmarked for the Annual Development
Program (ADP). This is a 17.2% increase from the revised ADP for FY 2021-22. Historically, ADP has been
financed through both internal and external resources, and in the current budget, 56% of the ADP is
expected to come from internal sources, while 44% will come from external resources. Of the external
resources, BDT 930 billion is expected to come from Project Aid. The top five sectors that will utilize the
ADP are mentioned below.
Table 2: Sector-wise allocation of ADP share in FY 2022-2023
2
2
20
2
2
0
2
0
0 0

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One of the major concerns with the Annual Development Program (ADP) is its utilization rates, which have
declined over the past decade in various sectors. This issue is highlighted by recent trends in the health
and education sectors. However, in this year's budget speech, the government emphasized prioritizing
projects that are close to completion and slowing down large projects that heavily rely on imported raw
materials.
Source: An Analysis of the National Budget for FY2022-23 – Center for Policy Dialogue (CPD)
Sources for Financing:
The upcoming fiscal year's total budget of BDT 6.78 trillion will be financed by various means, including
tax revenue from the National Board of Revenue (NBR), domestic loans, foreign loans or grants, and other
revenue sources. The NBR is expected to contribute BDT 3.7 trillion in tax revenue, which accounts for
54.6% of the total finances. This amount is a 12.1% increase from the previous fiscal year's revised budget.
Domestic loans will provide 21.6% of the finance, which is a 17.7% increase from last year. Foreign
borrowings will provide over BDT 95 billion, which is almost 24% more than the previous revised budget.
The following table provides a detailed breakdown of the finances:
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Source: Budget at a Glance- Ministry of Finance, Government of Bangladesh (GoB)
VAT, Income tax, Import duty, and Supplementary duty are the major contributors to Tax revenue from
NBR with 38%, 33%, 12%, and 16%, respectively. The budget has an overall deficit of BDT 2.42 trillion,
which is 5.4% of GDP, down from the previous year's 6.2%. Domestic sources will finance BDT 1.46 trillion
of the deficit, and 72.7% of this domestic financing will be provided by the banking sector.
Tackling Inflationary Pressure:
The national budget aims to increase revenue collection to finance public expenditure while also
recognizing the inflationary pressure due to various factors such as rising oil prices, the depreciation of
the taka against the US dollar, disruptions in the global supply chain, the Russia-Ukraine crisis, and rising
inflation in trade partners. The projected inflation rate for the upcoming fiscal year is 5.6%. In comparison
to May 2021, prices of various commodities such as fuel, urea fertilizer, soybean oil, wheat, and sugar
have significantly increased by varying percentages. The budget has incorporated sector-specific
measures to protect businesses and individuals from inflation.
Protection and Support Towards Businesses:
To tackle the inflationary pressure caused by various factors, the government has taken several measures,
including stabilizing the supply and curbing demand. The government has set up a special fund of BDT 50
billion for salaries and wages of export-oriented industries, as well as providing BDT 730 billion for large
industrial and service sector enterprises and BDT 400 billion for lending against working capital for
CMSMEs. The export development fund has been doubled to BDT 552 billion, and the tax on raw materials
for manufacturers has been reduced to 4%. In addition, sector-specific measures have been taken, such
as reducing the corporate tax rate to 12% for export-oriented industries, and extending the reduced
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Fo eign loans
Non ta e enue
a e enue non NB
Fo eign g ants

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corporate tax rate of 15% till FY 2025-26 for the textile industry. Local businesses have been offered a
corporate tax concession of 2.5% upon transacting receipts and income through a bank, and the corporate
tax rate has been reduced for listed companies, non-listed companies, and one-person companies. These
measures are expected to ease doing business and promote investment in the country.
• Company spending on Research and Development can be shown as expenditure without a ceiling
• The fringe benefit ceiling per person in a company has been increased to BDT 1 million per person
from BDT 0.55 million
• Easier tax rebates through amendments to input tax credit
• VAT dispute cases to change approach by reducing penalties and increasing payable time
• Reduced VAT in wholesale trading
Industry-specific VAT exemptions have also been proposed, with the following industries getting focus:
• Steel
• Pet Chips
• Local manufacturing of Active Pharmaceutical Ingredients
• Local purchase of raw materials for refrigerator
• Withdrawal of advance tax on imported raw material for polypropylene staple fiber
• Manufacture of power tiller
The proposed budget has several measures to support businesses and startups in the country. The
government has created a special fund of BDT 50 billion for export-oriented industries, BDT 730 billion for
affected large industrial and service sector enterprises, and BDT 400 billion for lending against working
capital for the CMSMEs. In addition, the government has reduced the source tax on raw materials for
manufacturers from 7% to 4% to maintain a stable environment for doing business.
The budget also includes sector-specific measures such as a reduced corporate tax of 12% for export-
oriented industries and a reduced tax rate of 15% for the textile industry till FY 2025-26. The tax rate for
listed companies has been reduced to 20%, for non-listed companies to 27.5%, and for one-person
companies to 22.5%. Startups have been given a higher opportunity to sustain by allowing them to carry
over 9 years of successive losses and reducing the tax rate from 0.6% to 0.1%.
Additionally, the budget has announced a ten-year tax break for fruit processing, vegetable processing,
dairy and dairy products, baby food products, and agricultural equipment manufacturing. Women-owned
SMEs (turnover less than BDT 7 million) will continue to enjoy tax breaks, and businesses are required to
show return submissions to avoid facing fines ranging from BDT 5,000 to BDT 20,000.

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Tax Evasion and Unconditional Preferences:
The government's efforts to support businesses come with a focus on formalizing business accounts and
revenue collection, indicating a desire for accountability and formal contribution to national revenue. This
is evident from proposed steps in the budget, such as the conditions for using banking channels and
reporting financials, which may result in businesses losing tax benefits and breaks during this difficult time.
• Power, gas, and water supplies are to be discontinued to factories defaulting on tax thereby
expanding the tax net and consolidating continuous revenue flow
• Tax deduction at source has been put in place for 16 sectors e.g., hotel, resort, community center,
transport agency, etc. Source tax for exports has been increased from 0.5% to 1%. The tax rate
is 10% for businesses with a turnover of 2.5 million and 12% for bigger ones. However, source tax
will be 50% if TIN registration is not completed. Besides, if the bills are not collected through the
banking channels, there will be a provision for 50% more source tax bringing more transparency
to the collection system
• State-owned banks will not be getting a capital injection to expedite business model reforms and
strengthen debt management capacities. In recent times Bangladesh Bank reported declined
capital shortfall when the capital injection was not sanctioned by the government
• Tax returns are to be made mandatory for global digital service providers like Facebook, Google,
Twitter, and Amazon in Bangladesh along with nonresident establishments. The process would
include registration, acquiring TIN, and subsequent regular file submissions.
Remaining Issues and Inquiries:
The government's measures to provide support to businesses and industries in the face of inflationary
pressures are evident from the discussions above. The budgetary stance adopted by the government
shows a clear effort to expand the tax net and bring businesses and high-income segments into the formal
channels. This move is aimed at establishing a system of accountable and transparent revenue collection.
The incentives and tax exemptions offered to businesses and industries in exchange for inclusion in formal
business channels and revenue collection systems are likely to be viewed from a monetary perspective.
However, corporations and business groups will also assess the challenges posed by the doubled source
tax, bureaucratic hurdles, and other factors that may complicate government processes.
While the measures taken by the government to support businesses and industries are commendable,
there are concerns about whether enough has been done for the low and middle-income groups. These
concerns will be addressed in part two of our analysis of the National Budget 2022-23. We will delve
deeper into the different aspects of inflation support in various sectors to assess their impact on the
broader economy. It is important to ensure that measures are in place to support the vulnerable sections
of society who may be hit the hardest by inflationary pressures.

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Conclusion:
The achievement of Bangladesh in reaching 81% of its target for the fiscal year 2020-21 and increasing the
target by 12.32% for the 2022-23 fiscal year has been overshadowed by the fact that India achieved 115%
of its target for 2020-21 and increased its target by 13.25% for 2022-23. The gap between budget and
implementation has a negative impact on the development outcomes of government programs and the
credibility of public finance. Selim Raihan, executive director of the South Asian Network on Economic
Modeling (SANEM), stated that the budget has fallen into a cycle of low revenue collection, low
implementation capacity, and low spending, and this cycle needs to be broken. The success of any plan is
measured by its implementation, which requires a massive collective effort of disciplined people, as
Finance Minister Mr. Tajuddin Ahmed emphasized in his first budget speech for Bangladesh.