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Summary of Budget FY 2012/13

June 8, 2012 Finance Minister has declared the budget for the FY 2012/13 on 7 th June, 2012. This BDT 1.93 trillion budget targets to overcome macro challenges and achieve 7.2% real GDP growth in the coming fiscal year. In the budget-speech, the Finance Minister has targeted to bring the inflation down to 7.5% in the FY 2012/13 from current level of 9.2%. Overall budget-size for FY 2012/13 exceeds that of FY 2011/12s by 19% while Annual Development Programme (ADP) increases by 34% in this pre-election fiscal year. Allocation to energy, infrastructure and education sectors account for 46.7% of the ADP- showing that governments development priority remains same in this fiscal year. On the other hand, non-development expenditure increases by 8% on the last fiscal years revised budget. Share of subsidies and interest expense in the total nondevelopment expenditure increase from 8.0% to 10.7% and 15.5% to 17.2% respectively in this budget over last years declared budget. It is a reflection of increasing fiscal burden where deficit is set to increase by 12% in the coming fiscal year. Overall deficit is budgeted to be 5% of the GDP and dependency on external and non-bank sources is set to increase to finance this deficit. National Board of Revenue (NBR) has targeted to mobilize 22% more resources in the coming fiscal. NBR tax revenue will be financing 59% of the budget.
Table 1: Summary of Budget for FY 2012/13 Budget 2012/13 Particulars NBR Tax Non-NBR Tax Non-NBR Revenue Total Revenue Non-development Expenditure Development Expenditure -of which ADP Other Expenditure Total Expenditure Budget Deficit External Domestic Borrowing from Banking System Long-term Debt Short-term Debt Non-bank borrowing National Saving Certificate Others Total Financing GDP Bn BDT % of budget % of GDP 1,123 46 228 1,397 995 601 550 321 1,917 521 186 335 230 184 46 105 74 31 521 10,414 59% 2% 12% 73% 52% 31% 29% 17% 100% 27% 10% 17% 12% 10% 2% 5% 4% 2% 27% 11% 0% 2% 13% 10% 6% 5% 3% 18% 5% 2% 3% 2% 2% 0% 1% 1% 0% 5% 100% Bn BDT 924 39 186 1,149 918 457 411 237 1,612 463 119 345 291 213 78 54 35 19 463 9,148 Revised 2011/12 % of budget % of GDP 57% 2% 12% 71% 57% 28% 25% 15% 100% 29% 7% 21% 18% 13% 5% 3% 2% 1% 29% 10% 0% 2% 13% 10% 5% 4% 3% 18% 5% 1% 4% 3% 2% 1% 1% 0% 0% 5% 100% YoY Change 22% 17% 23% 22% 8% 32% 34% 35% 19% 12% 57% -3% -21% -14% -41% 96% 111% 66% 12% 14%

Summary of Budget FY 2012/13 June 8, 2012

Figure 1: Revenue/financing sources

Local Nonbank, 5% Local Banking System, 12%

Key findings of the budget for FY 2012/12:

External Borrowing, 1 0% NBR Tax, 59%

Non-NBR Revenue, 12 %

Macro-economic targets: 1. 7.2% real GDP growth 2. 7.5% CPI-inflation 3. 22% growth of NBR tax revenue 4. Keeping the budget deficit within 5% of GDP Budget overview 1. A record BDT 1.93 trillion budget. It represents 18.4% of the GDP. 2. Overall budget-size increases by 19% on the revised budget of last FY. Expenditure: 1. ADP size increases by 32% to BDT 550 billion. ADP represents 29% of the budget and 5% of the GDP. 2. Non-development budget-size is set to increase by 8%. Share of subsidy and interest expense, jointly, will increase by 4.5% in the non-development expenditure. Revenue/financing source: 1. Internal resource mobilization will be the priority. Tax/GDP is set to increase to 11.2% from last years 10.5%. 2. Deficit will be less than 5% of GDP. Bank borrowing as % of deficit is set to decrease to 44% from last years revised target of 63%. Industries likely to benefit: Pharmaceuticals, ship-building industry, footwear. Industries likely to face adversity: Cement, tobacco/cigarettes.

Non-NBR Tax, 2%

Figure 2: Non-development budget of BDT 995

Housing, 0.6% LGRD, 1.5%

Misc Exp, 17.7%

Subsidies, 10.7 %

Agriculture, 2.8 %
Health, 3.8%

Social sec & welfare, 5.7% Interest, 17.2% Public Admin, 10.1%
Transport & com, 2.6%

Education & IT, 10.3% Pension, 3.2% Defence, 8.3%

Public order & sec, 5.5%

Figure 3: ADP of BDT 550 billion

Social sec & welfare, 4.5% Public Admin, 5.2%

Others, 7.7%
Energy & Power, 16.8%

Health, 6.8%

Agriculture, 7.7 %

Transport & Com, 16.8%

We will be publishing a detailed study on the implication of budget for different listed companies on the next business day.

Education & IT, 13.1%

LGRD, 21.4%

Summary of Budget FY 2012/13 June 8, 2012

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