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ECO315 Why Study Public Finance
ECO315 Why Study Public Finance
03/30/2021 Fall_2017 1
What makes Public Finance so compelling?
03/30/2021 Fall_2017 2
Motivation behind study Public Finance
03/30/2021 Fall_2017 3
Key facts about government
• The Size and Growth of Government
• Distribution of Government Spending
• Distribution of Revenue Sources
• Spending, Taxes, Deficits and Debt Service
• Major Policy Issues facing the Bangladesh
Economy.
03/30/2021 Fall_2017 4
The size and Growth of Government
Government Expenditure(% of GDP) in Selected South Asian countries
30
Government Expenditure(% of GDP)
25
Bangladesh
20 India
Pakistan
15
Sri Lanka
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Years
Source: WDI, World Bank
03/30/2021 Fall_2017 5
Distribution of Government spending
Distribution of Government
Distribution of Government
Expenditure by Broad Sectors, Expenditure by Broad Sectors,
2016-17(3406.05 Billion BDT) 2007-08 (796.13 Billion BDT)
Allocation(%) Allocation(%)
70000
60000
50000
Direct Tax Indirect Tax
Crores Taka
40000
30000
20000
10000
0
3 4 5 6 7 8 9 0 1 2 3 4
2 -0 3 -0 4 -0 5 -0 6 -0 7 -0 8 -0 9 -1 0 -1 1 -1 2 -1 3 -1
2 00 2 00 2 00 2 00 2 00 2 00 2 00 2 00 2 01 2 01 2 01 2 01
Fiscal Years
20
18
16
14
(% of GDP)
12
10
8
6
4
2
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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Budget Deficits
Bangladesh Budget Defi cits ,2001-2012
Deficit(% of GDP)
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-1.0
-2.0
-2.2
-3.0
-3.5 -3.4
-3.7
-4.0 -4.1
-4.4
-4.7 -4.8
-5.0
-5.2
-5.5 -5.4
-6.0 -6.1
-7.0
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Debt Service
1.25 1.24
1.201.20 1.19
1.15 1.15
1.12
1.10
1.08
1.05 1.05
1.00
0.96
0.95 0.94
0.95
0.92
0.90 0.89
0.85
0.80
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Years
Source: WDI, World Bank
03/30/2021 Fall_2017 12
Major Policy Issues facing the Bangladesh
Economy.
Expenditure on Education
Expenditure on Health
03/30/2021 Fall_2017 13
Expenditure on Education:
South Asian Perspective,2000 & 2004
Nepal 2.98
Nepal
3.17
Pakistan 1.84
Pakistan
1.95
India 4.25
India
3.29
0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50
Nepal 4.66
Pakistan 2.14
Pakistan 2.59
India 3.83
India 3.21
0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00
Source:
03/30/2021WDI,World Bank Fall_2017 15
Expenditure on Health:
South Asian Perspective,2000 & 2004
Nepal
5.43 Nepal 5.82
India
4.26 India 4.22
0.00 1.00 2.00 3.00 4.00 5.00 6.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00
Source:
03/30/2021
WDI,World Bank Fall_2017 16
Expenditure on Health:
South Asian Perspective,2008 & 2012
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00
Source:
03/30/2021 WDI, World Bank Fall_2017 17
(% o f t o t a l w e la fr e o f b e n e fi c ia r y h o u se h o ld s)
(% o f t o t a l w e fa r e o f b e n e fi c ia r y h o u se h o ld s)
Social Safety Net Programs:
South Asian Perspective,2006 & 2009
17.92
19.71
12.00
20.00
18.00 14.00
16.00 12.00 3.40
14.00 10.00
12.00 8.00 Sri Lanka
4.01
10.00 6.00 4.00
Pakistan
8.00 4.00
Sri Lanka
6.00 2.00 Bangladesh
4.00 Pakistan 0.00
2.00
Bangladesh
0.00
Bangladesh Pakistan Sri Lanka Bangladesh Pakistan Sri Lanka
Source:
03/30/2021 WDI, World Bank Fall_2017 18
Adequacy of social safety net programs
(% of total welfare of beneficiary households)
Definition: Adequacy of social safety net programs is measured by
the total transfer amount received by the population participating
in social safety net programs as a share of their total welfare.
Welfare is defined as the total income or total expenditure of
beneficiary households.
Common examples of Social safety net programs may includes:
• child, family and orphan allowances, birth and death grants,
disability benefits, and other allowances;
• food stamps and vouchers, food rations, supplementary
feeding, and emergency food distribution;
• housing allowances, scholarships, fee waivers, health subsidies,
and other social assistance;
• cash for work and food for work
Estimates include both direct and indirect beneficiaries.
(World Development Indicators, World Bank) 19
03/30/2021 Fall_2017