The document provides an overview of key aspects of Bangladesh's national budget for FY2016-17, including: - The budget sets GDP growth at 7.2%, inflation at 6%, and the budget deficit at Tk. 97,853 crore. - Major allocations include Tk. 26,847 crore for education, Tk. 17,487 crore for health, and Tk. 3,759 crore for water resources. - The total Annual Development Programme size is Tk. 1107 billion, a 21.6% increase over FY2016. - The budget deficit financing for FY2017 will be 37% from external sources and 63% from domestic sources.

1. Critical Analysis of
Government Budget
and Major Economic
Challenges for
FY2016-17

2. Bibekananda Biswas
19-058

3. Budget FY2016-17 at a glance
GDP growth targets 7.2%
Govt. sets 6% inflation target
Budget deficit is Tk.97,853 crore
Revenue target proposed at Tk.242,752 crore
Tax-free income ceiling unchanged at Tk.2.5 lakh
New VAT law to come into full effect from July
2017
Duty-free import of safety equipment for
exporters

4. Budget FY2016-17 at a glance
(cont’)
Package VAT stays with rates doubled
Agriculture Ministry gets Tk.13,675 crore
Education Ministry gets massive boost (Tk26,847
crore
Allocation for primary education went up by over
50%
Tk.3,738 crore increased for defense
Power allocation drops (Tk15,036 crore)
Tk.21,322 crore allocated for local government

5. Budget FY2016-17 at a glance
(cont’)
Health sector allocation up by a third (Tk17,487
crore)
Ministry of Water Resources gets Tk.3,759 crore
28.11% increment for Women and Children Affairs
20% corporate tax for RMG
Budget for Railway gets significant increase
Bridges Division gets Tk.9,289 crore
Tk.100 crore allotted for Tourism

6. Naiz Mohammad
19-061

7. BUDGET ANALYSIS
• The slogan of the national Budget 2016-17 was:
“MARCHING TOWARDS GROWTH, DEVELOPMENT AND
EQUITABLE SOCIETY”
• Finance Minister AMA Muhith on June 2 rolled out a Taka
340,605 crore national budget for 2016-2017
• Failure in tax reform and weak performance of the
annual development program (ADP) gave rise to a major
concern current fiscal year .

8. Public debt
• Public debt as % of GDP is at a reasonable state for
Bangladesh – may increase insignificantly in FY17 largely due
to rise in domestic debt.
• Currently about 57% of the public debt is attributable to
domestic source and 43% to foreign finance.
• Government needs to use low-cost borrowings
• Interest payment for domestic debt has already risen
substantially.
• Debt servicing for borrowing for large infrastructure projects
may put further pressure in future

9. Subsidy
• Total subsidy allocation is expected to be about 1.2% of GDP in
FY17 (1.1% in RBFY16)
• About 6.8% of total public expenditure
• These are reflected in loans and advances ((-) 19.5%
reduction)
• Agriculture subsidy will be Tk. 9,000 crore for FY16-17– same
as the previous year with unchanged subsidy structure
agriculture may not need the full amount
• In RBFY15-16 subsidy budget for agriculture was reduced to
Tk. 7,000 crore – it may be similar in FY16-17
• For export sector, allocation is Tk. 3,000 crore

10. Md.Naim Hosen
19-066

11. Financing Sources & Budget
Revenue FY16-17
• revenue generation target to Tk.2,427.52 billion in FY17
• 60 percent revenue will be collected from NBR tax
• 18 percent from domestic sources;
• 11 percent from external sources
• 9 percent and 2 percent will be from non-tax and non NBR tax

12. Financing Sources & Budget
Revenue FY16-17

13. Financing Sources & Budget
Revenue FY16-17
• The targeted revenue is 12.4 percent of the GDP which is 2.1
percent greater than the previous fiscal year (10.3 percent of
GDP).
• The Tax-GDP ratio (around 9.6 percent in the FY15 actual
budget) is much lower than our peer countries (ranging from
20 percent to 32 percent).

14. Saboz Ahmmed
19-111

15. ADP Allocation FY'17
• Annual Development Programme (ADP) an organized list of
projects in various sectors
• The ADP is prepared on the basis of the year's development
budget approved by the parliament
• The total ADP size in the Budget is Tk.1107 billion which is
21.6% higher than that of FY16

16. Budget Deficit Financing FY17
• Deficit Financing is a practice in which a government spends
more money than it receives as revenue
• The total revised budget deficit in FY16 is TK871.43 billion
• the next fiscal year it is estimated to be TK978.53 billion,
• It is 12.29 percent higher than FY16.

17. Budget Deficit Financing FY17
• the budget deficit financing will occur 37 percent
(Tk.363.05 billion) from the external source and
• 63 percent (Tk.615.48 billion) from the domestic source
• where 23 percent (Tk.226.10 billion) from non-banking
source and 40 percent (Tk.389.38 billion) from banking
source in FY17

18. Md.Monjurul Ahsan
19-099

19. Major Economic Challenges
• GDP Growth
• Revenue Collection
• Government Expenditure
• Budget deficit and financing
• Foreign Grants / Aid
• Remittance
• Export and Import
• Inflation
• Industrial term loans

20. Chandan Kumar Roy
19-164

21. FINDINGS OF FY 2016-17 BUDGET
• EXCESSIVE TAX BURDEN FOR LOWER INCOME GROUP
• Taxable limit has not been increased as per finance bill 2016
• The rate of tax rebate has been refixed from 15 to 10 per cent
depending on the level of income instead of flat 15 per cent
• Salaried employees are paying taxes fully as their company
pays salary after deducting tax at source, as required
• In Value Added Tax (VAT), tax collection at equal rate
irrespective of the economic standings of the people is a
regressive method.
• A new section 82c has been incorporated stating that
minimum tax will not be less than the tax deducted at source.

22. A critique of FY 2016-17 Budget
 Excessive tax burden for lower income group
 Higher income group relaxed
 Whitening black money
 Irrational revenue target for 2016-17
Planning of incremental spending not reformed
on priority basis

23. Md.Injamul Haque
19-179

24. RECOMMENDATIONS
considering past performance of failure in reaching the target of
revenue generation, the proposed budget is indeed ambitious.
But the target is not unattainable if
 Reforms are implemented,
 VAT law is passed,
 NBR (National Board of Revenue) activities are automated and
modernized,
 A dedicated team of trained manpower overlooks the
generation process, and
 Tax base is expanded. It appears that the Tk.450.00 billion of
additional taxes is to come by raising the rate of taxes rather
than expanding the base.

25. Thank You