Bangladesh News

The cabinet yesterday approved in principle an ordinance that will end disproportionately high allocation of funds for constituencies of powerful politicians and compel the government to clearly state allocations marked for each upazila, district and division in the budget.

This practice will ensure equity among different geographical communities, the ordinance says.

The last household and expenditure survey of Bangladesh Bureau of Statistics show that Barisal and Khulna divisions are the poorest with the lowest poverty alleviation rate. According to a finance ministry high official, it happened due to the lack of “powerful ministers” from these two regions.

“During a political government’s rule, there is a tendency of giving higher allocations to areas represented by powerful ministers or policymakers. As a result, a large part of the country remains deprived of minimum development allocations,” he said.

“This ordinance will hopefully end this anomaly,” he added.

The caretaker government’s council of advisers at a meeting yesterday approved in principle Public Resources and Budget Management Ordinance (PRBMO), 2008. Chief Adviser Fakhruddin Ahmed chaired the meeting.

The ordinance lays out some rules and regulations to ensure transparency in government expenditure. It imposes legal bindings on how the government borrows from local or international financiers, frames macro-economic policies and mentions do’s and don’ts in public expenditure.

It dictates that the government borrowing from internal resources should remain within two percent of the country’s GDP. The government should also try to avoid taking loans from the central bank.

The government should not take hard-term loans, including supplier’s credit or non-concessionary loans, exceeding one percent of the GDP.

The government should also not exceed its annual borrowing target–except in case of national security and natural disaster. In cases of exceptions, the finance minister will explain to the parliament why borrowing had to increase.

To ensure gender equity in public expenditure, the budget will show separate development allocation for women.

To end ambiguity about poverty reduction expenditure, sectors focusing on poverty alleviation have to be identified and the budget shall allocate at least 8.5 percent of the GDP to those sectors.

The budget will explicitly and separately show grants, subsidies, loans and investment earmarked for various state-owned enterprises.

The finance minister will review on quarterly basis revenue collection and expenditure and submit the results of the review to the parliament along with recommended course of action.

Authorities will not be allowed to divert funds from one sector to another without prior approval of the parliament.

The ordinance dictates that the chief accounting officer and the executive authority of each ministry or department will be liable for concerned government expenditures.

If any rule of the ordinance is violated or ignored, officials concerned will be punished.

The ordinance will now be sent to the law ministry for vetting. After that, it will be sent back to the council of advisers for approval. It will then be forwarded to the president for final approval.