BANGLADESH SEVENTH FIVE YEAR PLAN FY2016-FY2020

BANGLADESH SEVENTH FIVE YEAR PLANFY2016-FY2020Accelerating Growth, Empowering Every CitizenPrepared ByINTERNAL RESOURCES DIVISIONPlan Goals and Targets 7th FYPA.Income and povertyAttaining average real GDP growth of 7.4% per year over the Plan period.Reduction in the head-count poverty ratio by 6.2 percentage point.Reduction in extreme poverty by about 4.0 percentage point.Creating good jobs for the large pool of under-employed and new labor force entrants by increasing the share of employment in the manufacturing sector form 15 percent to 20 percent.Plan Goals and Targets 7th FYPB. Sector DevelopmentIncrease the contribution of the manufacturing sector to 21% of GDP by FY20.Substantial improvement of export to $54.1 billion by FY20.Achieving a Trade0GDP ratio of 50% by FY20.Plan Goals and Targets 7th FYPC.Macroeconomic DevelopmentTotal revenue to be raised from deficit of 5% of GDP.Government spending to be increased to 21.1% of GDP by FY20.FDI to be increased substantially to $9.6 billion by FY20.Plan Goals and Targets 7th FYPD.Urban DevelopmentAccess to improved water source will be ensured for all urban dwellers.Coverage of drainage system to be expanded to 80%Ensure sustainable urban development that supports increased productivity, investment and employment.Plan Goals and Targets 7th FYPE.Human Resource Development (Education, Health and Population)Achieving 100 percent net enrollment rate for primary and secondary education.Increasing enrollment rate in 12th class to 60%.Percentage of cohort reaching grade 5 to be increased to 10 from current 80 percent.Plan Goals and Targets 7th FYPF.Water and SanitationSafe drinking water to be made available for all urban population. Safe drinking water to be made available for all rural populationPlan Goals and Targets 7th FYPG.Energy and InfrastructureInstalled Generation Capacity of electricity to be increased to 23,000 MW by 2020.Increase per capita energy consumption from 371 kWh to 514 kWh.Electricity coverage to be increase to 96 percent.Plan Goals and Targets 7th FYPH.Gender equality, income inequality and social protectionFemale to male ratio in tertiary education to be raised from current 70 percent to 100 percent.The ratio of literate female to male for age group 20-24 to be raised to 100 percent from the current 86 percent.Plan Goals and Targets 7th FYPI.Environmental Sustainability Increase productive forest coverage to 20 percent.Improve air quality in Dhaka and other large cities and enact Clean Air Act.Plan Goals and Targets 7th FYPJ.ICT DevelopmentSpending on Research and Development to constitute 1% of GDP.Increase proportion of primary government schools with a computer laboratory.Improve teledensity to 100%.11GDP Growth ChartSpecific planPlan Periods (FY)Average GDP Growth RateRatio of actual to planPer Capita GDP growthPlan (%)Actual(%)(%)(%)First Plan1973-19785.54.0731.3Second Plan1980-19855.43.8701.5Third Plan1985-19905.43.8701.6Fourth Plan1990-19955.04.2842.4Fifth Plan1995-20007.15.1723.5Sixth Plan2000-20057.36.3864.9Source: BBSPer Capita GDP in US DollarBangladesh Sixth plan Growth Performance in International Context (% p.a. 2011-2015)Structural Change in Economy(% of GDP)Structure of the EconomyFY2010FY2015Agriculture17.8115.59Industry26.1427.98-of which Manufacturing16.8920.17Services56.0556.42Sources: BBSEstimated Job Creation in the Sixth Plan (million workers)FY2020(Base Year)FY2015(Estimated)FY2015(Adjusted Plan Target)Domestic Employment-Agriculture25.724.424.5-Manufacturing6.79.610.0-Other industry2.84.34.4-Services & Others18.923.124.4Total Domestic Employment54.161.463.3Source: GED EstimatesProjected Reduction in Poverty during the Sixth Plan Period(%)YearPoor(Head Count Poverty with Upper Poverty Line(%)Extreme Poor(Head Count with Lower Poverty Line(%)201129.916.5201228.415.4201327.214.6201426.013.7201524.812.9Source: GED estimates based on 2005-2010 GDP-Poverty RelationshipSixth Plan Key Targets of the Macroeconomic FrameworkPolicy AreaPerformance IndicatorsBaseline(FY2010)Plan(FY2015)Actual(FY2015)Fiscal PolicyTax to GDP ratio(%)7.812.49.3Fiscal Deficit(%GDP)3.45.05.0Source: Sixth Plan and GED EstimatesProgress with Infrastructure developmentAccess to electricity from the FY2010 baseline of 48% to 72% in FY2015

Per capita electricity increased 220 kWh to 371 kWh

Macroeconomic DevelopmentTotal revenue to be raised from 10.7% of GDP to 16.1% by FY20

Maintain the current fiscal deficit of 5% of GDP

Government spending to be increased to 21.1% of GDP by FY20

FDI to be substantially to $9.6% billion by FY20

7th Five Year Plan TargetsTargetsBase Year2010Progress under 6th FYP 20157th FYP2020Real GDP Growth(%)6.16.58Head Count Poverty(%)31.524.818.6Growth in agriculture(%)6.153.043.34Growth in industry(%)7.039.610.9Growth in services(%)5.535.836.49Total Revenue(% of GDP)9.9810.716.1NBR Tax Revenue (% of GDP)8.039.013.7Fiscal Deficit(% of GDP)3.34.74.7Continued7th Five Year Plan TargetsTargetsBase Year2010Progress under 6th FYP 20157th FYP2020Total Government Spending (% of GDP)13.8815.721.1National Savings (% of GDP)29.4429.0132Gross Domestic Investment (% of GDP)26.2528.9734.4Access to improved sanitation facilities (% of population)5357100Income Inequality(Gini coefficient)0.4582.022.3Post-2015 Sustainable Development Goals(SDGs) a proposed by the Open Working Group(OWG)SDG 1 End Poverty in all its forms everywhereSDG 2 End hunger, achieve food security and improved nutrition, and promote sustainable agricultureSDG 3 Ensure healthy lives and promote well-being for all at all agesSDG 4 Ensure inclusive and equitable quality education and promote life-long learning opportunities for all

ContinuedPost-2015 Sustainable Development Goals(SDGs) a proposed by the Open Working Group(OWG)SDG 5 Achieve gender quality and empower all women and girlsSDG 6 Ensure availability and sustainable management of water and sanitation for all.SDG 7 Ensure access to affordable, reliable, sustainable, and modern energy for allContinuedPost-2015 Sustainable Development Goals(SDGs) a proposed by the Open Working Group(OWG)SDG 8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for allSDG 9 Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovationPost-2015 Sustainable Development Goals(SDGs) a proposed by the Open Working Group(OWG)SDG 10 Reduce inequality within and among countiresSDG 11 Make cities and human settlement inclusive, safe, resilient and sustainableSDG 12 Ensure sustainable consumption and production patternsSDG 13 Take urgent action to combat climate change and its impacts ContinuedPost-2015 Sustainable Development Goals(SDGs) a proposed by the Open Working Group(OWG)SDG 14 Conserve and sustainably use the oceans, seas and marine resources for sustainable developmentSDG 15 Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse and degradation and halt biodiversity lossContinuedPost-2015 Sustainable Development Goals(SDGs) a proposed by the Open Working Group(OWG)SDG 16 Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institution at all levelsSDG 17 Strengthen the means of implementation and revitalize the global partnership for sustainable developmentBangladesh: Key Economic Indicators, FY15 to FY20ComponentsFY15FY16FY17FY18FY19FY20Average(FY16-20)Est.ProjectionReal GDP Growth6.57.07.27.47.68.07.4Gross Investment28.930.131.031.832.734.432.0National Savings29.028.929.530.030.531.930.2Total Revenue10.812.113.514.315.116.114.2Tax Revenue9.310.611.512.313.114.112.3Non-Tax Revenue1.51.52.02.02.02.01.9Sources: BBS, Bangladesh Bank, Ministry of Finance and Seventh Plan Projection, GEDBangladesh: Central Government Operations, FY15 to FY20ComponentsFY15FY16FY17FY18FY19FY20Average(FY16-20)Est.Projection(in )Total Revenue1633208426353171380946273265.2Tax Revenue1406182222442728330440522830.2NBR Tax Revenue1350176421662639320339372741.9Non-Tax Revenue227262390444504575435.0Sources: Ministry of Finance and Seventh Plan ProjectionBangladesh: Central Government Operations, FY15 to FY20ComponentsFY15FY16FY17FY18FY19FY20Average(FY16-20)Est.Projection(in Percent of GDP)Total Revenue and Grants11.212.513.914.715.516.514.6Total Revenue10.812.113.514.315.116.114.2Tax Revenue9.310.611.512.313.114.112.3NBR Tax Revenue8.910.311.111.912.713.711.9Non-Tax Revenue1.51.52.02.02.02.01.9Bangladesh: Central Government Operations, FY15 to FY20ComponentsFY15FY16FY17FY18FY19FY20Average(FY16-20)Est.Projection(in billions of Taka)External1.11.41.21.21.11.01.2Domestic3.63.33.43.53.63.73.5Bank2.22.12.22.32.42.52.3Non-Bank1.41.21.21.21.21.21.2Revenue-SFYP Targets and ActualFY 11FY 12FY 13FY 14FY 15Average (FY 11-15)As % of GDPSFYPActualSFYPActualSFYPActualSFYPActualSFYPActualSFYP

Actual

Total revenue12.110.213.210.813.410.71410.414.610.813.510.6Tax revenue108.710.6911.2911.88.612.49.311.28.9NBR Taxes9.68.3108.7118.6118.3128.9118.6Non-tax revenue21.52.51.82.21.72.21.82.21.52.21.7Source: SFYP Documents and NBRFinancing of total public sector outlays during the seventh planSocial Sector SpendingInvestment ProgrammeNRB Revenue Growth under the Sixth Plan

Growth in Tax Components under the Sixth Plan

Growth in Tax Revenue in Recent yearsFY06FY07FY08FY09FY10FY11FY12FY13FY14FY15Tax Revenue Growth(%)13.410.026.611.517.427.519.414.810.712.8Average15.817.1Source: National Board of RevenueTax Reform Programs Completed During the Sixth FYPTax Administration Reform: Income Tax Establishing 13 new Income Tax Zones, 2 Tax Appeal Zones and 85 Circle OfficesAutomation of TIN registration and linking TIN with National IDTax calculator installed on the NBR website(www.nbr-bd.org)Payment of taxes using the Q-Cash network under the platform of e-payment of NBREstablishing taxpayer information and service centers at all divisionsProviding enhanced taxpayer services through spot assessment, income tax fair etc.E-filing of income tax returns on a pilot basis(LTU)Introducing incentive based taxation system through tax cards, certificates etc. for tax complianceStrengthening the Central Intelligence Cell (CIC) for combating tax evasion

Tax Reform Programs Completed During the Sixth FYPTax Administration Reforms: VAT and Customs Establishing 4 new VAT Commissionerates and 3 VAT Appeal Commissionerates,Setting up of 1 new Custom House (ICD), merger of Import and Export Wings of Chittagong Custom House, setting up of a full-blown Commissionerate at ChittagongInstalling ASYCUDA World System in all Custom Houses and 4 Land Custom StationsOnline connectivity between the customs database and Bangladesh Bank database for combating money launderingDeveloping customs databaseE-filing of VAT returns on a pilot basis at Large Taxpayers Units(LTUs)Growth in Tax Revenues under 7th Plan Compared with the Sixth Plan

Tax-GDP Ratios under Various Scenarios

Revenue Structure in the Seventh Five Year Plan Period(FY16-FY20)As% of GDPFY14FY15FY16FY17FY18FY19FY20ActualRevised Budget7FYP PeriodTotal Revenue10.410.812.113.514.315.116.1Total Tax Revenue8.69.310.611.512.313.114.1NBR Tax Revenue8.38.910.311.111.912.713.7Source: National Board of RevenueMajor Components of Revenue in the Seventh Five Year Period(FY16-FY20)As% of GDPFY14FY15FY16FY17FY18FY19FY20ActualRevised Budget7FYP PeriodCustoms Duty1.01.01.11.21.21.21.3VAT+SD4.54.65.45.76.46.67.0Income Tax2.63.23.74.14.34.95.4Others0.10.10.10.10.10.10.1Non-NBR Tax0.30.40.30.40.40.40.4Non-Tax Revenue1.81.51.52.02.02.02.0Source: National Board of Revenue and Seventh Plan ProjectionNBR Tax Reform Required for Attaining Tax Targets in the Seventh Five Year PlanTax Policy ReformsEffective Implementation of VAT and Supplementary Duty Act 2012Incorporating transfer pricing in the Income Tax Ordinance, 1984Incorporating Alternative Dispute Resolution (ADR) in Income Tax, VAT and custom ActsDrafting of a new Direct Tax CodeDrafting of a new Customs ActNBR Tax Reform Required fo Attaining Tax Targets in the Seventh Five Year PlanTax Administration Reforms: Income TaxBroadening of the taxpayers baseBroadening of the tax revenue sourcesFocusing on income from service providers and self-employed (who are difficult to tax)Treating all sources of income equally for the tax purpose without discrimination for the householdsAutomation of TIN registration and linking TIN with National I.DIntegrated Revenue Management Programme: Digitalization ProgrammeE-Filling of income tax returnsAggressive imposition and expansion of withholding taxesStrategic Communication and Taxpayer Outreach, Education and Assistance

Tax Administration Reforms: VAT and CustomImplementation of the new VAT Act.Expanding VAT base especially on business and organizationIncentivizing VAT Payment with benefits for small businesses to bring them into the VAT coverage as well as promoting increased formalization of businesses currently operating in the informal sector.Reform of the VAT Administration along functional linesAutomation of the whole tax administration through central Data base including central VAT Registration; electronic submission and return processingComprehensive taxpayers education and information campaign about the new VAT law and Rules.

Fiscal Deficit and Financing under Seventh Five Year PlanAs % of GDPFY 14FY 15FY 16FY 17FY 18FY 19FY 20ActualRevised Budget7 FYP PeriodFiscal Deficit (including Grants)-3.1-4.7-4.7-4.6-4.7-4.7-4.7Financing3.14.74.74.64.74.74.7Domestic Borrowing2.83.63.33.43.53.63.7-Bank1.42.22.12.22.32.42.5-Non-Bank1.51.41.21.21.21.21.2External Borrowing (net)0.31.11.41.21.11.11.0Source: Seventh Plan Projection based on Budget FY16 dataMinistry-Wise Annual Development Program Allocation in the Seventh Plan: ADP by Ministry(FY16-FY20)ADP in current PricesNo.SectorMinistryDivisionFY 16FY 17FY 18FY 19FY 201General Public ServicesInternal Resource Division4.66.88.19.511.12Environment and Climate ChangeMinistry of Environment and Forests4.87.38.610.111.9Total development Expenditure9.414.116.719.623Development Results Framwork(DRF) For Monitoring The Seventh Five Year Plan(2016-2020)Performance IndicatorsBaseline (Year)Target(2016)Target(2017)

Target(2018)Target(2019)Target(2020)Real SectorReal GDP growth (%)6.5 (FY, 2015)7.07.27.47.68.0Fiscal SectorTotal Revenue(as % of GDP)(a) Tax Revenue (as% of GDP)10.8 (FY 2015) (a) 9.3 FY 2015)12.1(a)10.613.511.514.312.315.113.116.114.1Thank You