#1CENTRE FOR POLICY DIALOGUE Fiscal data in Bangladesh: Issues and Challenges Towfiqul Islam Khan Senior Research Fellow Centre for Policy Dialogue (CPD) সেন্টার ফর পলিসি ডায়লগ (সিপিডি) Centre for Policy Dialogue (CPD) The Asia Foundation Dhaka: 24 February 2022#2Study team and acknowledgement Study team Debapriya Bhattacharya, Distinguished Fellow, CPD Towfiqul Islam Khan, Senior Research Fellow, CPD Muntaseer Kamal, Senior Research Associate, CPD Rakshanda Khan, Former Research Associate, CPD Acknowledgement The study team would like to thankfully recognise the generous support and cordial cooperation received from The Asia Foundation. The team is much grateful for the insightful comments and suggestions offered by the participants of the expert group meetings (EGMs) held on 30 November 2021, 1 December 2021 and 21 December 2021 and the participants of key informant interviews Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 21#3Structure of presentation 1. Context 2. Study objectives 3. Conceptual framework 4. State of affairs of fiscal data in Bangladesh 5. Bangladesh's performance in the Open Budget Survey (OBS) 6. What are the major concerns 7. Concluding remarks Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 3#41. Context ☐ Fiscal data comprises of three domains of government budget data: revenue earnings, public expenditure and budget deficit and financing □ In the backdrop of a weak fiscal reporting system, Bangladesh's institutional shortcomings interrupt the attainment of fiscal transparency Demand for fiscal data has increased manifold in recent times ➤ Bangladesh's dual transition via graduation to LMIC status and upcoming graduation from the LDC group, has implications in terms of a higher cost of borrowing for financing development and more difficult conditions for market access ➤ In view of the formidable financing requirement to achieve the ambitious SDGs, the issues of domestic resource mobilisation and optimal use of resources have re-emerged with greater urgency ➤ The ongoing COVID-19 pandemic has made the already complicated situation even more complex Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 4#52. Study objectives Three specific objectives of the study To provide an assessment of the state of affairs with regards to the fiscal data ecosystem of Bangladesh To identify the challenges in the fiscal data ecosystem of Bangladesh deciphering both the demand side and supply sides issues of the problematique To contribute towards informed decision making for promoting openness and transparency of fiscal data The study focuses on fiscal data provided by the central government The study mainly deals with the core fiscal data domains viz. revenue, expenditure, budget deficit and it's financing ➤ Additionally, indicators such as contingent liabilities and public debt are also discussed This study evaluates the fiscal indicators provided by key government agencies such as FD of MoF, IMED, NBR, and BB Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 5 сл#63. Conceptual framework The demand side (data users viz. policymakers, civil society, media, researchers, development partners etc.) and supply side (data generators and suppliers viz. MOF, NBR, IMED, BB etc.) of the fiscal data ecosystem will be evaluated based on four dimensions: The four 'A's Availability Existence Recognisability Accessibility Degree of access Sorting of data Disaggregation Functionality Use of proxy indicators Reproducibility Accuracy Standardisation Agility (Promptness) Timeliness Frequency Long term availability Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges Comparability Harmonisation 6#74. State of affairs of fiscal data in Bangladesh I. Availability Categories of fiscal data Fiscal data Medium term targets Budgetary targets (contd.) Revised budgetary targets Actual attainments Lenses of disaggregation Agency/Ministry Economic classification/purpose ☐ Geographical disaggregation is mostly unavailable ☐ Some budgetary data disaggregated by poverty, gender, climate, child etc. are also available. However, their availability may vary over time Comprehensive budget allocation estimates for other marginalised groups are not available Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 7#84. State of affairs of fiscal data in Bangladesh (contd.) Major domains of fiscal data Revenue earnings Public expenditure Budget deficit and financing Tax revenue Operating expenditure Foreign source Non-tax revenue Development expenditure Domestic source Other expenditure Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 8#94. State of affairs of fiscal data in Bangladesh Major sources of fiscal data Budget documents Other public expenditure Finance Division Finance Division Revenue Deficit financing (contd.) Finance Division NBR Finance Division Bangladesh Bank CGA ADP Bangladesh Bank CGA Finance Division IMED Planning Commission CGA ☐ MoF is the natural lead government agency Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 6#104. State of affairs of fiscal data in Bangladesh (contd.) II. Accessibility All of the reports produced by the provider agencies are available in PDF format However, the monthly reports available through the NBR and IMED are oftentimes provided in a script that cannot be reproduced (i.e. copy- pasted) Among the reports reviewed, only BB's Monthly Economic Trends is published in both PDF and Excel formats A major commonality exists amongst all the sources such that the searchability of data within their website is limited ➤ For instance, the MoF website returns a blank page when searching for the core data domains All the sources exhibit similarity in terms of the websites having a non- interactive web interface such that the data cannot be sorted Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 10#114. State of affairs of fiscal data in Bangladesh (contd.) The monthly reports from NBR and the IMED are available in Bengali only. Certain reports produced by the MoF are in English only. The annual report by BB is the only one available in both Bengali and English Multilingual reports increase the ability of various stakeholders to use it Some reports published by the MoF and BB have various forms of data visualisation including graphs, bar charts and pie-charts which increases a user's understandability of the data For example, the annual report published by the BB uses a pie chart to show composition of tax revenue while MFRP uses a bar graph along with trend lines to show trends in revenue growth over time ➤ Thus, other data providers such as IMED and NBR could invest in resources that could incorporate data visualisation aspects into their regular reports to increase user friendliness Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 11#124. State of affairs of fiscal data in Bangladesh (contd.) III. Agility (promptness) In terms of agility, expenditure domain is performing the worst ➤ A source wise comparison reveals that, the BB has the most updated monthly data while MoF has the least updated monthly data pertaining to FY2022 Timeliness of Key Documents Agency Document name Frequency Related domain(s) Availability Comment on Web as of 20 Feb 22 Monthly Fiscal Monthly Revenue, Jun 21 Time lag of Report expenditure and seven deficit financing months Monthly Report Monthly Revenue, Jun 21 Time lag of MoF on Fiscal-Macro expenditure and Position deficit financing Quarterly Budget Quarterly Revenue, Dec 21 seven months Updated Execution Report expenditure and deficit financing Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 12#134. State of affairs of fiscal data in Bangladesh (contd.) Timeliness of Key Documents (contd.) Agency Document name Frequency Related domain(s) Availability Comment on Web as Year End Fiscal Annual Revenue, of 20 Feb 22 FY2015 Report expenditure and Time lag of six years deficit financing Bangladesh Annual Revenue, FY2021 Updated MoF Economic Review expenditure and deficit financing Budget Annual Revenue, FY2022 Updated documents expenditure and deficit financing Monthly Report Monthly Revenue Dec 21 Time lag of on Revenue one month NBR Collection Annual Report Annual Revenue FY2020 Time lag of one year Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 13#144. State of affairs of fiscal data in Bangladesh (contd.) Timeliness of Key Documents (contd.) Agency Document name Frequency Related domain(s) Availability on Comment Web as of 20 Feb 22 Monthly Monthly Expenditure Dec 21 Time lag of IMED Progress Report Annual Annual Progress Report Selected Weekly Economic Indicators Monthly Monthly BB Economic Trends Major Monthly Economic Indicators Annual Report Annual expenditure and deficit financing Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges Report published timely but with Dec 21 data Report published timely but with Nov 21 data Report published timely but with Nov 21 data FY2020 one month Time lag of one year Time lag of Time lag of two months Time lag of two months Time lag of one year Expenditure FY2020 Revenue one month Revenue Revenue and deficit financing Revenue, 14#154. State of affairs of fiscal data in Bangladesh (contd.) IV. Accuracy ☐ Accuracy of fiscal data in Bangladesh has been repeatedly brought under scrutiny as different sources published different figures for the same indicator and same source published different figures for the same indicator over time NBR tax collection: Data discrepancy between sources NBR Difference Departure (in %) Year MOF in crore Tk. from MoF FY17 171,639 171,656 17 0.01 FY18 187,103 202,313 15,210 8.13 FY19 218,622 223,462| 4,840 2.21 FY20 216,037 216,452 415 0.19 FY21 |263,872 259,867 -4,005 -1.52 Source: Compiled and calculated using data from MoF and NBR Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 15#164. State of affairs of fiscal data in Bangladesh (contd.) Year MOF ADP expenditure: Data discrepancy between sources IMED Difference Departure (in %) in crore Tk. from MoF FY17 83,500 100,414 16,914 20.26 FY18 119,538 139,234 19,696 16.48 FY19 147,287 158,269 10,982 7.46 FY20 155,421 154,977 -444 -0.29 FY21 159,648 164,440 4,792 3.00 Source: Compiled and calculated using data from MoF and IMED Deficit financing: Data discrepancy between sources Difference Departure (in %) Year MoF BB in crore Tk. from MoF FY17 66,003 57,084 -8,919 -13.51 FY18 |104,624| 87,540 -17,084 -16.33 FY19 138,170 114,282 -23,888 -17.29 FY20 151,402 140,893 -10,509| -6.94 FY21 122,501 83,984 -38,517 -31.44 Source: Compiled and calculated using data from MoF and BB Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 16#174. State of affairs of fiscal data in Bangladesh (contd.) The reasons behind data discrepancy may include: ➤ Difference in data collection methodology and sources (e.g. MoF vs NBR or MoF vs IMED) ➤ Definitions of indicators (MoF vs BB) ➤ Time lag in reporting (MoF vs IMED) □ iBAS++ data should be more accurate as it is based on accounting system ☐ These differences may also create confusion while making policy actions In past, it has been experienced that when the relevant government agencies come together and reconcile their data, the discrepancies can be minimised Stakeholders often opt for more readily available data and forgo the accuracy and credibility aspects □ If iBAS++ data can be made available more widely and in a timely manner, the quality of public finance data can be improved Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 17#185. Bangladesh's performance in the OBS Cross-country comparison of OBS score and ranking over time Country Indicator 2006 2008 2010 2012 2015 2017 2019 Score 39 42 48 58 56 41 36 Bangladesh Rank 38 44 46 28 31 66 79 Score 53 60 67 68 46 48 49 India Rank 17 20 14 14 53 53 53 Score 47 64 67 46 39 44 47 Sri Lanka Rank 26 13 13 53 70 60 g 54 Score 20 19 18 16 24 17 21 Nigeria Rank 52 61 73 80 85 90 97 Score 32 51 55 65 62 60 58 Uganda Rank 43 32 32 18 24 29 36 No of surveyed countries 40 77 93 100 102 115 117 0-20 21-40 41-60 Scant or none Minimal Limited 61-80 Substantial 81-100 Extensive Insufficient Sufficient Source: Open Budget Survey (various issues) Note: The scores are reported in a 0-100 scale index where 100 is the best score In OBS 2019, Bangladesh's score was lower than that of the global average (45) and the South-Asian average (46) Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 18#195. Bangladesh's performance in the OBS (contd.) Availability of key budget documents over time in Bangladesh Document 2006 2008 2010 2012 2015 2017 2019 ◉ ㅁ Pre-budget statement ㅁ * * * Executive's budget proposal Enacted budget ✓ ✓ ✓ Citizens budget * * * ✓ In-year reports ◉ ◉ Mid-year review ◉ * * ✓ Year-end report * * * Audit report ◉ Source: Open Budget Survey (various issues) ✓ Available to the public □ Published late, or not published online, or produced for internal use only * Not produced Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges * * ◉ 19 19#205. Bangladesh's performance in the OBS (contd.) Public participation scores (cross-country comparison) 17 11 80 31 28 ■■Bangladesh 23 25 23 22 22 India 19 19 15 17 15 13 13 11 13 11 Sri-Lanka Nigeria ■Uganda 2012 2015 2017 2019 For OBS 2019, the global average of public participation score was 14. Both Bangladesh and India scored lower than the global average Bangladesh scored the same for OBS 2017 and OBS 2019 improvement of the situation - indicating no MoF and NBR conduct pre-budget consultations during the budget formulation □ However, it still lacks mechanisms to actively include and engage civil society members, vulnerable and underrepresented communities who are willing to participate in the budget formulation process There is no documentation mechanism to understand if the perspectives emerging from these discussions are reflected or not Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 20#216. What are the major concerns: Availability Existence In several instances, variables of interest are totally absent Revenue loss due to tax exemptions (by NBR or MoF) ➤ Allocation for social protection is available but actual expenditure is not ➤ DPPs for ADP projects are often not available in detailed format Disaggregation Required level of disaggregation is rarely present. ➤ Key fiscal indicators are mostly not disaggregated by location, sources/sector, gender, marginalised groups, project etc. ➤ Income tax mobilsed from individuals and corporate sources are not reported by MoF ➤ Tax collected from special provisions are also not reported Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 21#226. What are the major concerns: Accessibility Degree of access □ Some indicators/reports are not accessible via public domains ➤ MoF stopped publishing the budget implementation report on their website despite the Hon'ble Minister presenting it before the national parliament There is no credible source of long term data on fiscal indicators Functionality Some indicators/reports are not provided in easily usable/retrievable format NBR and IMED upload scanned images in PDF format for monthly reporting Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 22#236. What are the major concerns: Agility Timeliness The key players have consistently struggled in timely data reporting ➤ MoF is yet to publish the any monthly report for FY22 (time-lag of seven months), NBR Annual Report is available for up to FY20 (time-lag of one year) The time between publication of budget documents and passing of the Finance Bill does not offer much time for discussion Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 23 23#246. What are the major concerns: Accuracy Harmonisation: Divergence between fiscal data provided by the key data suppliers makes the situation more difficult to gauge ➤ Discrepancy between data reported by MoF and NBR (revenue mobilised by NBR), MoF and IMED (ADP expenditure) and MoF and BB (financing of budget deficit) □ Large discrepancy in fiscal data raises questions about the reliability ☐ Similarly, reported data which is revised by a large margin at a later date is likely to face questions regarding its credibility and accuracy □ Often the policymakers may consider less accurate data only because it is more readily available Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 24 24#256. What are the major concerns: Use in policymaking Use in policymaking: The present state of availability (and accessibility) of fiscal data do not adequately meet the demand for policymaking and ensuring transparency and accountability ➤ Constituency-wise data is not available ➤ Impact analyses (both ex-ante and ex-post) of fiscal measures are mostly missing ➤ Decisions are often taken (in an ad-hoc basis) without stakeholder consultation ■ For instance: SROs, new ADP projects, supplementary budget All of the aforementioned issues impedes effective policymaking in a transparent and accountable manner These also limit the capacity for better use of public money Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 25 25#266. What are the major concerns: Use in policymaking (contd.) Why is government spending less than its programme? In FY21, budget deficit (excluding grants) was programmed to be Tk. 189,997 crore (6.58% of GDP) □ According to MoF's Monthly Fiscal Report (June 2021), actual budget deficit was Tk. 129,593 crore (4.49% of GDP) - less than FY20 (Tk. 156,035 crore or 6.14% of GDP)! The government could have spent an additional Tk. 60,404 crore if it maintained programmed level of budget deficit This is equivalent to about 83.2% of total social protection budget (excluding 'Pension for Retired Government Employees and their Families') and more than double of budgetary allocations for Health sector in FY21 Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 26#276. What are the major concerns: Use in policymaking (contd.) Why is government spending less than its programme? According to 'Quarterly Budget Execution' report for Second Quarter 2021-22, the government has a budget surplus to the tune of Tk. 1,357 crore (excluding grants)! ☐ The government has shown a relatively conservative attitude in extending budgetary allocations for cash transfer and subsidy to combat the COVID- 19 pandemic and rising commodity prices Is it driven by the government's economic and political vision or lack of fiscal space? Or is it because the policymakers are not fully aware of fiscal position (data-wise) of the country in real time? Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 27 27#287. Concluding remarks Summary of observations In terms of availability, the expenditure domain is relatively lagging behind vis-à-vis demand for these data While fiscal data might be accessible online, they are in PDF format ☐ Time series of fiscal data is not available in one source Identification of accurate data requires prior knowledge regarding the data collection process and methodology of the relevant agencies which might not be common amongst the layperson ☐ Fiscal data which are better in terms of timeliness often suffer in terms of accuracy criteria □ There is no 'gold standard' when it comes to fiscal data - focusing on one dimension could mean forgoing the others Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 28#297. Concluding remarks (contd.) The data producers appear to be quite content with the present status quo of fiscal data MoF must play a proactive and lead role - To bring forth some much needed improvement, there is a need of a big push from the demand side, particularly on the part of policymakers including the elected public representatives - at present it is led by data analysts The non-state actors i.e. CSOs and media need to maintain their demand Best use of existing resources such as the iBAS++ has remained untapped To carry out data related activities, adequate dedicated personnel will need to be deployed in the MoF To ensure data harmonisation and consistency, inter and intra-agency coordination needs to be strengthened There is no institutional mechanism or data protocol to ensure timely delivery of accurate and accessible fiscal data Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 29#307. Concluding remarks (contd.) Recommendations In order to support the budgetary decision making process, a number of documents, indicators and analyses needs to be made available by the government in a timely manner. These include: Documents ➤ Pre-budget statement ➤ In-year, mid-year and year-end budget reports ➤ Audit reports Indicators ➤ Revenue forgone due to tax exemptions ➤ Actual expenditure for social protection Analyses ➤ Impact analysis of fiscal measures (both ex-ante and ex-post) Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 30#317. Concluding remarks (contd.) ■To facilitate regular monitoring of fiscal activities, the following measures will prove to be helpful: ➤ It is possible to utilise the existing iBAS++ system to provide more disaggregated and detailed fiscal data. This system should be used more comprehensively to report data on a regular basis ➤ The budget documents titled 'Combined Demand for Grants' and 'Consolidated Fund Receipts' should report actual expenditure and receipt figures respectively. Monthly reports of budget implementation based on these two documents should be prepared based on iBAS++ ➤ Actual expenditure on social protection and subsidies and transfers should be reported on a monthly basis. Detailed breakdown of the currently available aggregates will be necessary ➤ Monthly reporting of project wise ADP expenditure should be published Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 31#327. Concluding remarks (contd.) Data on budgetary allocations and public expenditure (e.g. for social protection programmes) at the upazila/constituency level should be published so that MPs can take budgetary decisions and monitor implementation The Audit Reports, provided by CAG of Bangladesh, should be prepared and published within 18 months of the fiscal year The impact evaluation reports of the ADP projects should be produced regularly in a timely manner The different fiscal data providers must follow a specific timeline to release data - a publicly available ‘data release calendar' needs to be prepared As the same indicators are reported by different agencies (sometimes with different values!) in different time periods, there should be a protocol on when to use data from which sources Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 32#337. Concluding remarks (contd.) Metadata and definitions for all indicators should be provided. It has to be ensured that different agencies follow the same definition while reporting the same indicator The government should take an initiative to develop a comprehensive database which will provide long term data series in excel or any other easily reproducible format Improvement in the area of fiscal data would require considerable political will and a change in the mind-set of core actors It is to be realised that timely disclosure of accurate fiscal data can only improve implementation of budget and attainment of the national development objectives Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges 33#34Thank You cpd.org.bd fcpd.org.bd You cpdbd Tube CPDBangladesh Bhattacharya et al. (2022): Fiscal data in Bangladesh: Issues and Challenges