Does budget reflect the economic development of a country?

Yes, budget always reflects social and economic ratio of different sections of
population. Thus, by means of budget instruments can influence social and economic
development in the country and consequently. With the help of budget policy one can
achieve provision of the national strategy and the development of country by repre-
senting general plan, concerning the problem of mobilization of cash resources and
their distribution to satisfy population’s demands, to perfect and extend productive ca-
pacity etc.

Budget is a legal document of government that is often passed by the

legislature, and approved by the chief executive or president. For example, only certain
types of revenue may be imposed and collected. Property tax is frequently the basis for
municipal and county revenues, while sales tax and/or income tax are the basis for state
revenues, and income tax and corporate tax are the basis for national revenues.

The two basic elements of any budget are the revenues and expenses. In the case of
the government, revenues are derived primarily from taxes. Government expenses
include spending on current goods and services, which economists call government
consumption; government investment expenditures such as infrastructure investment or
research expenditure; and transfer payments like unemployment or retirement benefits.

Budgets have an economic, political and technical basis. Unlike a pure economic
budget, they are not entirely designed to allocate scarce resources for the best
economic use. They also have a political basis wherein different interests push and pull
in an attempt to obtain benefits and avoid burdens. The technical element is the
forecast of the likely levels of revenues and expenses.

Sources of Budget is the way of income or revenue of the budget. Such as Tax
Revenue (NBR), Tax Revenue (Non NBR), Foreign Loans, Foreign Grants, Domestic
Financing, Non-Tax Revenue.
 Uses of Budget is the way of expense of the budget. Such as Interest payment,
Education & IT, Energy & Power, Agriculture, Social security & welfare, LGRD,
Transport and communication etc.

Economic Indicator is a statistic about the economy. Economic indicators allow

analysis of economic performance and predictions of future performance. Such as GDP,
GNP, NI, Central Bank Reserve etc.

June 10th, Bangladesh on Thursday announced a US$19.06 billion (BDT 1.321

trillion) national budget for the 2010-2011 fiscal year.

Finance Minister Abul Maal Abdul Muhith proposed the budget for the 2010-11
fiscal year in the parliament on Thursday, accounting for 16.9 percent of the GDP with a
target of 6.7 percent GDP growth. The GDP is projected to increase 8 percent by 2014.
Finance Minister Muhit proposed 2010-11 fiscal year budget with huge deficit of
Tk 393.23 billion, or 5 percent of the GDP. The deficit will be tamed with Tk 156.43
billion from foreign sources, and Tk 236.8 billion from domestic sources.
The proposed budget for the 2010-11 FY shows an increase of 20.15 percent
from the current year's revised budget.

Total outlay: Tk 1, 32,170cr, Interest payment: 11.1pc, Education & IT: 13.2%, Energy
& Power: 4.6%, Agriculture: 5.4%, Social security & welfare: 7%, LGRD: 8.1%
Projections: GDP growth: 6.7%, Inflation: 6.5%, Income: Tk 92,847cr, Deficit: Tk
39,323cf, Domestic borrowing: Tk 23,680cr, Foreign borrowing: Tk 15,643cr, Revenue
expenditure:Tk93,670cr.ADP:Tk38,500cr.
Price Up: Reconditioned cars, Motor vehicles, Imported motor cycles, Apartments,Cigarettes/
bidis / gul, chewing tobacco, Air tickets, Imported air-conditioners, Imported refrigerators,
Imported papers, Juice, energy drink, fruit drinks, mineral water, Ceramics/ stones, tiles and
mosaic, particle and laminated boards, Ceramic made bathtub and jacuzzi, sink, basin,
Shampoo/Cosmetics, Filament bulbs, Paints.
Price Down: Locally manufactured refrigerators, freezers, Locally manufactured motor cycles,
Energy-saving lamps, Plastic and rubber sandals, Coconut oil, Skimmed milk, LCD/LED panels
are also expected to get less expensive.

Highlights power
Electricity is a key ingredient for the socio-economic development of the country. Adequate and
reliable supply of electricity is an important pre-requisite for attracting both domestic and foreign
investment. The Government has given top priority to development of the sector considering its
importance in overall development of the country. The Government has set the goal of providing
electricity to all citizens by 2020.

Power Division was established in 1998 under the Ministry of Power, Energy and Mineral
Resources vide Cabinet Division Notification No. CD-4/1/94-Rules/23(100), dated 25 March
1998. It is entrusted with the responsibility of overall management of the power sector in
Bangladesh.

Sufficient and reliable source of electricity is a major prerequisite for a sustained and successful
economic development effort and poverty reduction. In Bangladesh, 90 million of the population
out of 140 million do not have direct access to electricity and remaining 50 million people have
access but reliable and quality power is still beyond their reach. To alleviate poverty in the face
of resource limitations and high population density,

Bangladesh requires an economic growth rate of more than 7% p. a. to provide employment to its
rapidly growing labor force that cannot be absorbed by agriculture. In order to achieve this
growth rate, availability of a reasonably priced and reliable source of electricity is a prerequisite.
Bangladesh being categorized as one of the least industrialized nations, by best utilizing its
natural, human and agricultural resources the desired pace of GDP growth could be attained by
increasing electricity generation at much higher rate, which is the key target for development.
Government of Bangladesh has made vision and policy statement regarding power sector
improvement. It is government's constitutional responsibility to provide electricity to the people.
In the vision statement it was mentioned that providing access to affordable and reliable
electricity to the majority of the people of Bangladesh by 2020 is a fitting national goal to usher
the next millennium.

Main components of Reforms

The Government is committed to the Power Sector Reforms and intends to achieve the aforesaid
objectives within a reasonable span of time. The main components of the proposed reforms
program are :

• Segregation of power generation, transmission and distribution functions into separate

services.
• Corporatization and commercialization of emerging power sector entities.
• Creation of a Regulatory Commission.
• Private sector participation in power generation and distribution.
• Introduction of cost reflective tariff for financial viability of the utilities and promoting
efficient use of electricity.
• Development of demand side management including energy efficiency measures to
conserve energy.
• Development of alternative/renewable energy sources.

Reforms and Restructuring : Measures Undertaken

Reform in the Power Sector has already started. The foremost priority in the reform agenda of
the Government is to establish a legal frame-work for enabling business transaction in the new
environment. The roles of owners and operators would be delegated to evolving functional
entities according to the structural needs of reformed power sector under the supervision of the
Energy Regulatory Commission. Government shall, however, issue policy directives on matters
concerning electricity including on measures which are considered necessary for the overall
planning and coordination for the development of the electricity sector.
Budget regulation
In works, devoted to budget processes and budget development of the country, budget regulation is defined as
a component of financial, economic and social regulation as a whole. Prof. I. Chugunov describes budget
regulation as a dynamic system, which is accomplishing and adapting to the main objectives of social and
economic development, including the parameter of formal rules of taking decisions (Chugunov, 2003). The
balanced level of all instruments of budget regulation influences the tempo of social and economic
development simultaneously and in time. The main task of budget regulation is the fulfilment of the main
objectives of social and economic development of the state, as well as administrative and territorial units.
By means of budget instruments the state employs different forms of influence on economy through subsidies
to the population and different organizations, state investments, budget financing of some branches that
determine scientific and technical progress. Such policy gives the possibility to achieve desirable changes of
economic proportions.
Therefore, the state expenses for social sphere, economic activity, fundamental investigations, and expenses
for financing state programmes of the development can create favourable conditions for investment activity in
the state. One can not exclude the influence of tax policy, as there is direct dependence between expense and
income parts of budget. Nowadays, it is well known that some taxes have considerable influence on the level
of GDP, while it in its turn influences all investment processes (Zatonatska, Stavytskyy, 2007a, 2007b).

The key problem of budget policy in modern Ukraine is to make such tax system, which may be directed to
economic growth (Zatonatska, Stavytskyy, 2006 a). The tax system with objectives of only fiscal character has
no desirable effect, as under conditions of market economy the influence of expenses on effectiveness of using
resources is of paramount importance.

Conclusions
Summing up the data presented above, it is possible to come to the conclusion that the influence of the expenses for
promoting economic development in the country is really very important. At the same time, the most urgent problem for
our state is its energy complex. In other branches the increasing of expenses for economic activity leads to intensive
investment activity. It should be mentioned that the largest part of increment provides private investments.
Unfortunately, the Ukraine does not use effectively budget investments in high technology branches. While
investigating budget expenses for economic activity, it was concluded that the state investment activity, which
is a part of budget policy, does not favour to the change of the na tional economic structure and provision of a
certain level of socio-economic development. The largest part of state investments is directed to branches with
low technological level. It means that increasing of such investments only will not facilitate solving strategy
tasks, raising Ukrainian competitive level. It is an essential part for ensuring the economic security of the state.
When increasing state investments to stimulate private investment activity one may propose to define
precise ways and directions of budget expenses for economic activity, which may facilitate socio-economic
development of the country providing its economic security. To achieve such a goal one should develop
actions for medium-term planning of budget expenses.

The issue of this work was the analysis of the Ukrainian budget policy. The investigation of the influence of
budget expenses on different types of investments was presented applying certain econometric models, which
were suggested by the authors.