Bangladesh Budget 2015-16 Budget Overview:

Finance Minister AMA Muhith has proposed the budget for 2015-16 fiscal today (June 4, 2015). This is the country’s 44th budget where Muhith placed his seventh budget in a row. Below is the overview of the budget

Bangladesh Budget 2015-16

Revenue: The revenue receipts for FY2015-16 have been estimated at BDT 2,084.43bn which is 12.14% of GDP, of which NBR tax revenue is estimated at BDT 1,763.70bn (10.27% of GDP). Tax revenue from non-NBR sources has been estimated at BDT 58.74bn (0.34% of GDP). Besides, BDT 261.99bn (1.53% of GDP) is expected to be collected from non-tax sources.

Expenditure: Total expenditure for FY 2015-16 has been estimated at BDT 2,951bn (17.19% of GDP). Taking ADP allocation for autonomous bodies to the tune of BDT 39.96bn into account, the size of the total budget will stand at almost BDT 3,000bn. The allocation for non-development expenditure including other expenses has been estimated at BDT 1,925.41bn (11.50% of GDP). In addition, BDT 970bn has been estimated for ADP.

Bangladesh Budget 2015-16 ADP: In the ADP of FY 2015-16, 21.97% was allocated to the human resource sector (education, health and other related sectors), 25.28% to overall agricultural sector (agriculture, rural development and rural institutions, water resources and related others), 19.05% to power and energy sector, 22.33% to communication (roads, railway, bridges and others related to communication) sector and 11.37% to other sectors.

Budget Deficit: The overall, budget deficit will be BDT 866.57bn which is 5% of GDP, of which, BDT 301.34bn (1.76% of GDP) will be financed from the external sources and BDT 565.23bn (3.29% of GDP) from the domestic sources. Of the domestic financing, BDT 385.23bn (2.24% of GDP) will come from the banking system and BDT 180bn (1% of GDP) from savings certificate and other non-banking sources. GDP: The government has projected the target of gross domestic product (GDP) growth at 7% for the upcoming fiscal year. Industry and service sectors on the supply-side and, consumer spending and public and private investment, on the demand-side, will be the drivers of this growth. Investment Target: Over the last ten years, the total investment in terms of GDP has increased to 28.9% from 25.8%. During this period, although public investment rose to 6.9% from 5.5%, private investment is hovering around 21% to 22% of GDP. In this setting, the objective is to increase total investment by boosting private investment to 24% of GDP in the medium term (2016- 18). At the same time, public investment is expected to scale up to 7.8% of GDP.

Power: The Government plans to increase power generation capacity to 24 thousand MW by 2021. With this goal in mind, it plans to establish coal-fired power plants, renovate old power stations, develop power transmission and distribution systems, install pre-paid meters in phases, import electricity under sub-regional cooperation, diversify energy sources and increase power generation from renewable energy sources.

1) Coal-based Power Generation: Considering that coal will be the main fuel after 2015, the govt. has finalized a plan to establish coalbased power plants. Some of the important steps are: forming Bangladesh-India Friendship Power Company for setting up 1 thousand 320 MW coalfired power plant at Rampal, signing an agreement with JICA for the construction of 1 thousand 200 MW coal-based power plant at Matarbari, installing four power plants at Moheskhaliwith 38 combined capacity of 4 thousand and 800 MW electricity each generating 1 thousand 200 MW and another coal power plant of 1 thousand 320 MW at Paira in Patuakhaliwith the financial assistance of China, Malaysia, South Korea and Singapore. At the same time, agreements have

Bangladesh Budget 2015-16 also been signed to establish coal power plant to generate 1 thousand 411 MW electricity under public-private partnership.

2) Nuclear Power Plant: As a long term solution of power crisis, the govt. has undertaken a plan to generate 2 thousand MW and 4 thousand MW electricity from nuclear energy by 2022 and 2030 respectively.

3) Power Import under Sub-Regional Cooperation: The Govt. has fixed a target to import 6 thousand 500 MW electricity by 2030 from the neighboring countries. Since November 2013, we are importing 500 MW electricity from India. Import of additional 600 MW is under process. Discussion on importing hydro electricity from Nepal, Bhutan, Myanmar and north-eastern region of India is in progress. 4) Renewable Energy: The Govt. has established Sustainable and Renewable Energy Development Authority (SREDA) with the intention of generating 2 thousand MW electricityfrom the renewable energy sources by 2020. A programme has also been launched to produce 500 MW electricity from solar energy.

5) Transmission Line: Till December 2014, about 0.331mn km transmission line has been constructed to supply electricity to 16.20mn users. There is a plan to construct 10 thousand km new transmission line and 0.15mn km new distribution line to bring everybody under electricity coverage.

6) Expansion of Energy Production Capacity and Import of LNG: Technical capacity of BAPEX has been enhanced to dig more exploration wells in the prospective areas. On the other hand, in order to reap the benefits of maritime boundary dispute resolution with India and Myanmar, we are conducting 3D seismic surveys and working on signing production sharing contracts. At present, we have 26 blocks in the deep and shallow water ready for exploration. Production capacity of Barapukuria Coal mine has been increased by adopting advanced technology. If we start extracting coal from the north side of the mine by using an open method, 110 million MT of coal could possibly be extracted over the next 25 years with an estimated 4-5 million MT coal per year. Besides, initiatives to install an LNG terminal and import LNG to meet ever increasing energy demand are underway. Hopefully we will be able to supply gas from imported LNG by mid-2017. Transportation: In the transport sector, the government will implement the on-going 27 projects expeditiously to upgrade important highways to four-lanes. Dhaka-Chittagong and Dhaka-Mymensingh four-lane highways will definitely be completed within the next fiscal year. Among 133 projects included in the ADP for the transport sector, 39 will be completed in FY 2015-16. The massive work has begun on the banks of the Padma. We expect to open the bridge for transportation by 2018. In a report, the World Bank stated that the Padma Bridge project, once

Bangladesh Budget 2015-16 completed, alone will enhance GDP by 0.56% annually while accelerating economic activities in the backward southwestern region of the country.

Economic Zone: Big investment initiatives such as those found in Japan, South Korea, China and India cannot be realized due to scarcity of land. In order to change this scenario, approval has been accorded to the establishment of 30 public and private economic zones in different parts of the country.

Internet Services: In order to provide internet services to the people, 11 thousand km of optical fiber cableline is being laid in 1 thousand 6 unions of all the districts. Apart from this, a project has been undertaken to establish broadband network to provide broadband internet services to the entire country. In near future bandwidth capacity is expected to increase the from 200 Gbps to 1 thousand 300 hundred Gbps by connecting the country with the second submarine cable. Besides, the govt. plans to establish 8 thousand 500 Post e-Centres by June 2017. It has also selected an orbital slot and signed a contract for launching the first ever satellite (Bangabandhu Satellite- 1) of Bangladesh into space by 2016.