The Budgetary System of Bangladesh & Remedies to Overcome Budget Deficit
CHAPTER-ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Government budget deficit have been common in Bangladesh like other developing countries. When a budget deficit prevails in a given year, it means that government authorities cannot collect enough revenue from taxes and other sources to cover their annual expenditure. To over the deficit, the government must borrow funds, so that it can meet its expenses in the current fiscal year, thereby fulfilling its obligations. When the government borrows funds, it adds to its debt.
The size of the government debt is related to whether it can balance its budget. The only way the Debt can decline is through a budget surplus that allows the government to pay off some of its previous borrowings .The government debt, which was about TK.12 thousand Corers at the end of 1999, has increased by over TK.6 thousand crore in 2000.If budget recur government debt continues to increase. Since 2000 the government has made some progress in reduction in the deficit but in 2004 the deficit was still TK15 thousand crore.
This report investigates both the current and the future impact of budget deficits and increased government debt. This report analyzes the causes of budget deficit and well investigates their effects on interest rates, future tax rate, and private production.
OBJECTIVES OF THE STUDY
The main objective of this report is to show the reasons behind the budget deficit and how the government finances it. In Bangladesh we see over the year the government has been facing a problem to finance the budget deficit. For sustainable growth in any country macro economic stability is very important. So sound and balanced budget can give us economic stability. More specifically the objectives may be stated as follows
1. Identify the various sectors in the economy that can finance the budget deficit. 2. Analyze the government revenue income and expenditure. 3. Analyze the internal and external sources of finance to deficit
INTRODUCTION
BACKGROUND OF THE STUDY
Government budget deficit have been common in Bangladesh like other developing countries. When a budget deficit prevails in a given year, it means that government authorities cannot collect enough revenue from taxes and other sources to cover their annual expenditure. To over the deficit, the government must borrow funds, so that it can meet its expenses in the current fiscal year, thereby fulfilling its obligations. When the government borrows funds, it adds to its debt.
The size of the government debt is related to whether it can balance its budget. The only way the Debt can decline is through a budget surplus that allows the government to pay off some of its previous borrowings .The government debt, which was about TK.12 thousand Corers at the end of 1999, has increased by over TK.6 thousand crore in 2000.If budget recur government debt continues to increase. Since 2000 the government has made some progress in reduction in the deficit but in 2004 the deficit was still TK15 thousand crore.
This report investigates both the current and the future impact of budget deficits and increased government debt. This report analyzes the causes of budget deficit and well investigates their effects on interest rates, future tax rate, and private production.
OBJECTIVES OF THE STUDY
The main objective of this report is to show the reasons behind the budget deficit and how the government finances it. In Bangladesh we see over the year the government has been facing a problem to finance the budget deficit. For sustainable growth in any country macro economic stability is very important. So sound and balanced budget can give us economic stability. More specifically the objectives may be stated as follows
1. Identify the various sectors in the economy that can finance the budget deficit. 2. Analyze the government revenue income and expenditure. 3. Analyze the internal and external sources of finance to deficit