Report on Public finance of Bangladesh in comparison with principles of

financial administration in the context of Bangladesh

Course Name: Financial Administration and Management

Course Code: PA 2316

Submitted to
Nusrat sharmin khadiza
Lecturer,Department of Public Administration
Faculty of Arts and Social Sciences (FASS)
Bangladesh University of Professionals (BUP)

Submitted By
Sanzida Alam
ID:19161010
Department of Public Administration
Faculty of Arts and Social Sciences (FASS)
Bangladesh University of Professionals (BUP)

Submission date:17 August 2020

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Principle of Financial Adiministration with the context of Bangladesh

Public Finance:

First of all, the term public finance may be defined as the identification of specific financial
relationships and functions running between public administration bodies and institutions.In
Bangladesh, Public expenditures, public revenue and particularly taxes may be considered to be
the fundamental elements of public finance. Important terms derived from these three elements
include deficit, public debt, budgetary policy and fiscal policy.

Public Finance Cycle:

Formulation
of fiscal policy

Generation of
revenue from
Accountability texation and
other sources

Expenditure of
Public funds throgh the
borrowings national budget

Public Finance
Management
Collection of sufficient resources from the economy in an appropriate manner along with
allocating and use of these resources efficiently and effectively constitute good financial
management. Resource generation, resource allocation, and expenditure management (resource
utilization) are the essential components of a public financial management system.
The following subdivisions form the subject matter of public finance.
 Public expenditure
 Public revenue
 Public debt
 Financial administration

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  Federal finance
Principles of Financial Administration:
1) The principle of primary of public interest, public choice and public policy;

2) The principle of political direction and control;

3) The principle of correspondence;

4) The principle of unity of organization and management;

5) The principle of stability and balance;

6) The principle of simplicity and flexibility;

7) The principle of conduct, discipline and regularity;

8) The principle of public trust and accountability.

There are eight principle of financial administration.A brief discussion on them are stated
below:
1.The principle of primary of public interest, public choice and public policy: This is the
first principle of financial Administration.In this principle,public interest,public policy and
public choice are the first priority.Government takes responsibility for people.And according
toProfessor Adams, in his "Science of Finance", stated that the Science of Finance treats of the
wants of the State and the means of their supply and hence the fiscal policy should not impair the
patrimony of the State. He considered this dictum as an important axiom of fiscal policy and
administration.So, in this study both locus and focus would be included.There dependent not
only public sector but also private sector work together.

For example:
Covid-19, Bangladesh budget 20-21 and public debt:
The enhanced budget allocation for the healthcare sector and the stimulus packages
announced are commendable and steps in the right direction. But given the scale of the crisis,
these allocations can only be viewed as stopgap measures rather than long term measures, in
particular to shore up the public healthcare system and to create a more expansive and inclusive
social security network. The lessons of this pandemic must be learned quickly and the present
crisis also presents an opportunity to rethink ways to better deliver healthcare and welfare
spending.

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2.The principle of political direction and control:

Every society possesses what may be called politico-legal framework for conditioning all of
human activity, both public and private.Financial administration, as a subsystem of public
administration, should conform to these political ideas and ideals as expressed through the
constitutional process of the society. Further, it should adjust itself to the political structure of a
particular society to which it is attached. In modem times, democratic ideas and ideals have
replaced all the previous structures and ideals.

For example: political party regime (Awami league, BNP and Ershad or military regime)and
their financial activities.

3.The Principle of Correspondence :

This principle implies that there should be a causal relationship between the objectives of
financial administration and the functions, the human and material resources necessary to
accomplish such objectives.In other words, the type of functions, the personnel required to
handle them and the physical facilities necessary for the purpose should have a rational mutual
interrelationship.The essence of this principle is that the objectives and the functions should
provide the basis for staffing and equipping of the financial organisation.

For example: This implies the cause and result relationship. That is, the financial public policies

made impacts the public. If proper policies are made and implemented accordingly then it would
ultimately result into betterment of the mass again if the policies are not made and implemented
properly it would cause sufferings to the mass. In Bangladesh though the policies are made but
proper implementation is hardly evident causing the national and social economic development
futile.

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4.The Principle of Unity of Organisation and Management:

In this principle,there must have a unity among them to works is going effectively.And The work
of the different financial and non-financial agencies is coordinated and highly evaluated by the
top officials of the government.For example:

For example:National plan:In Bangladesh,the National Plan for Disaster Management is

indicative to what the relevant regionaland sectoral plans would consider to address the key
issues like risk reduction, capacity building,climate change adaptation, livelihood security,
gender mainstreaming,community empowerment and response and recovery management. The
plan also willact as basic guideline for all relevant agencies in strengthening better working
relationsand enhancing mutual cooperation.

5.The principle of stability and balance:

It is a known fact that the financial administration is characterized by technical expertise and
hence cannot be handled by unskilled and non-trained personnel. This character poses serious
problems when there is a loss of specific trained personnel For this purpose, there is need for
effective-manpower planning together with a good program for human resource development.

For example: Banking sector’s HR department. Human Resource is an emerging concept in

Bangladesh and organizations such as a Bank put much more emphasis on this department so
this study will help the organization as well. In this regard, this research will help to increase
organization’s performance in a way the employee of the organization will think.In following
this principle all must have technical good concept and expertise.Also there have a good
manpower or trained power.Manpower must be skilled so that public finance would effective and
its uses would be effective.So,Bangladesh Bank or other commercial banks are the good example
of it.

6.The principle of simplicity and flexibility:

The principle of flexibility implies that the financial organisation should develop capacity to
adjust itself. to fluctuations on work flows, human compositions and physical facilitiesIn a
democratic era electorate functions as the fountain of all authority. All other democratic

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institutions, including parliament, derive their authority from electorate.They are elected by
people.And there should have to be cost reduction.

For example:Texation system of National Board of Revenue. The National Board of Revenue is
the central authority for tax administration in Bangladesh. It is under the Internal Resource
Division of Ministry of Finance. NBR is the authority for tax policies and tax laws in
Bangladesh.

7.The principle of conduct, discipline and regularity :

The principle of conduct implies that the officials of public financial organizations should act
ethically and set high ethical standards and styles to the people. No organisation can function
effectively without firm financial discipline. The practicing administrators are prone to use
imposed discipline which may not yield desirable outcomes. What is needed is voluntary or self-
discipline.

For example:The Ministry of Finance is a ministry of Bangladesh. The ministry is responsible

for state finance, including the state budget, taxation and economic policy in Bangladesh. It is led
by the Finance Minister of Bangladesh. The department must report to the Parliament of
Bangladesh. It contains four divisions.So each and every administration should act ethically so
that transparency,accountability are ensured.So Finance ministry and other related
Administration should follow this principle.

8.The principle of public trust and accountability:

This principle emphasizes on the fact that there should be accountability of the expenditure of public
funds, collection of taxes and all the other financial activities to the general people.

For example: Transparency and Accountability in Climate Finance Governance: There is no

alternative to integrity, transparency and accountability in climate finance governance for
achieving resilience of the climate victims of Bangladesh.And every public sector should have to
trust and accountability .

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