BANGLADESH

The People’s Republic of Bangladesh is a unitary and democratic country with a single legislative house, the parliament, following a Westminster-style democracy. The parliament comprises 300 directly elected members and 50 women members elected by the same parliament. Universal suffrage decides the directly elected members of the parliament. Members are elected for a five-year term. The president is the head of state, who is elected by the parliament and serves a five-year term with a two-term limit. The president appoints the leader of the party (or coalition) of the legislative majority as the prime minister.

The subnational government system in Bangladesh is enshrined in the 1972 Constitution, the current and first constitution of the country. Article 59 of the Constitution stipulates that the national government establishes subnational government bodies at all levels of administration. Between the early 1980s and 1990s, the subnational government system in Bangladesh underwent a large-scale administrative reorganisation to decentralise power.

Broadly, subnational governments in Bangladesh are of two types - rural and urban. The urban subnational government is divided into city corporations and municipalities (pourashavas) while the rural subnational government has three levels, the districts (zila parishad), the sub-districts (upazilla parishad) and the union of villages (union parishad). In addition, there are also hill district parishads meant for three hill regions in the southeast – namely Bandarban, Rangamati and Khagrachari.

City corporations and municipalities are headed by directly elected mayors and commissioners - who serve for five years. Mayors are elected by all eligible voters of a municipality/city corporation. Commissioners are elected by residents of a city corporation’s/municipality’s territorial unit known as ward. A number of wards constitutes the total area of a city corporation/municipality. At the rural level, the chairmen and councillors/members of sub-districts as well as union of villages are also directly elected for a five-year period. The functions and responsibilities between these vary.

Urban local governments enjoy the highest degree of authority amongst all the subnational government bodies. However, the national government can exercise authority over any subnational governments because it possesses the legal basis to eliminate them. All subnational governments are constitutionally autonomous and hierarchical.

In parallel with this subnational government system, the national government has deconcentrated government units, namely the divisional administration at the city corporation level, the district administration at the municipal level, and upazilla administration at sub-district level.

The government of Bangladesh established a comprehensive legal framework for subnational government bodies in 2009. In 2011, the act relating to urban subnational governments was amended. In addition, there are a number of supplementary acts and norms regulating the different tiers of the subnational government system in Bangladesh. The local government division (LGD) within the Ministry of Local Government, Rural Development and Cooperatives (MLGRD&C) is in charge of developing and implementing legislation regulating urban subnational government bodies. The Rural Development and Cooperatives Directorate oversees all affairs pertaining to rural local government bodies.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
4 554 union of villages (union parishad); 12 city corporations; 328 municipalities (pourashavas)	492 sub-districts (upazilla parishads)	64 districts (zila parishad)
Average municipal size: 33 651 inh.
4 894	492	64	5 450

Overall Description: There are eight administrative divisions in Bangladesh that house 64 districts or zilas. Each division is headed by a divisional commissioner and each district by a district commissioner. District commissioners are assisted by diverse professionals appointed through the national government, as well as by the elected councils. There are over 30 national government ministries and line departments engaged in providing administrative supports to the district administration by appointed or deputed government bureaucrats.

Divisions house one or several city settlements. There are 12 city corporations in 12 of the country’s biggest towns and 328 municipalities (pourashavas) are located across the country. In city corporations and municipalities, two-thirds of the ward commissioners are elected by their respective constituencies and one-third are women members nominated by the elected commissioners. There are three categories of pourashavas (A, B, C class) based on the volume in their yearly revenue generation. Recent developments in territorial organisation include the formation of new municipalities or the spatial expansion of existing municipalities via an amalgamation with adjacent union of villages.

In rural areas, there are 492 upazilla parishads. Below the tier of upazilla parishads, there are 4 554 union councils (union parishads). A union parishad consists of a number of wards – similar to city governments. The Local Government (Upazilla Parishad) Act of 2009 provides for upazilla parishads to be headed by elected representatives – namely chairman and members. The latest elections took place between November 2021 and February, 2022. The upazilla parishad functions as an intermediate authority between the village-level union parishads and higher-level zila parishads.

A major part of subnational governments’ functions is the provision and management of various public services. Pourashavas and city corporations of Bangladesh have been endowed with the necessary mandates by the local government (city corporation, pourashava/municipality) acts of 2009 to provide such public services. In particular, the relevant mandates of pourashavas/municipalities have been clearly stated in Article 95 as well as Article 97 and in Schedule 2 of the Local Government (pourashava/municipality) Act of 2009. Functions and services of city corporations are specified in Article 41 and in Schedule 3 of the Local Government (City Corporation) Act of 2009.

The assignment of functional responsibilities to subnational governments suffers from a lack of clarity and overlapping mandates (e.g., in health and education, infrastructure development, etc.) and the urban ones are no exception to these issues. There are also comparable problems in the functional assignments of subnational governments and deconcentrated administration. In addition, subnational governments are often unable to deliver all mandated services due to lack of financial resources, skilled manpower, and strict control by the national government.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Municipal level (city corporations)	Municipal level (pourashavas)
1. General public services (administration)	Public buildings and facilities	Administrative services (marriage, birth, death, character certificate etc.) Public buildings and facilities
2. Public order and safety	Regional firefighting services	Municipal traffic signs; Preparedness on rescuing the flood-affected people with boats and necessary equipment; Developing rules on harmful and illegal business and their prevention; Construction, maintenance and operating the graveyards and cremation spots.
3. Economic affairs / transports	Regional roads, railways, airports and ports inter-city and regional railway transport, transports; Employment services; Support to local enterprises and entrepreneurship; Agriculture and rural development; regional Tourism	Local roads (shared); Park spaces; Local ports; Urban transport; Local tourism
4. Environment protection	Nature preservation; Soil and groundwater protection, climate protection; Sewerage	Parks & green areas; Waste management; Street cleaning; Wastes disposal; Operating and maintenance of the public toilets and supervising the private toilets; Supervision of unhygienic buildings.
5. Housing and community amenities	Construction/renovation; Management	Construction/renovation (shared); Distribution of drinking water; Public lighting; Urban and land use planning;
6. Health	Hospitals and primary health clinics	Primary healthcare (medical centres) (shared); Controlling and prevention of communicable diseases.
7. Culture & Recreation	Regional museums; Cultural heritage	Sports; Libraries; local museums
8. Education	Primary, Secondary and Intermediate education	Pre-primary and primary education (shared)
9. Social Welfare	Care for the elderly; Disabled people (benefits and services); Vagrant homes.	Social care/ Shelters for children and youths without parents (shared); Support services for slum-based/urban poor families

Scope of fiscal data: City corporations and municipalities

Ministry of Finance

Availability of fiscal data: Low

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: The Constitution of Bangladesh empowers urban subnational governments along with their rural counterparts (Article 60) “to impose taxes for local purposes, to prepare their budgets, and to maintain funds”. Funds for urban subnational governments come from both national government grants and own source revenues. In particular, urban subnational governments are entitled to access local public and private funds which include their own revenue income, assistance from the government of Bangladesh’s own fund (i.e., development aid, special grants and loans, block grant through the annual development programme, octroi compensation grants and salary subvention). These governments are also eligible to receive donations from private individuals. In addition, urban subnational governments can access international public and private grants and credits from the overseas development partners. For that, agreements between the government of Bangladesh and a proposed international grant providing authority/development partner ought to be signed. While particular subnational government acts provide the framework for own source revenue mobilisation, the share of the annual budget that is available for fiscal transfers to urban subnational governments is left to the discretion of the central government.

Subnational government expenditure by economic classification
2019/20	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	48	0.9%	5.1%	100.0%
Inc. current expenditure	-	-	-	-
Compensation of employees	-	-	-	-
Intermediate consumption	-	-	-	-
Social expenditure	-	-	-	-
Subsidies and current transfers	-	-	-	-
Financial charges	-	-	-	-
Others	-	-	-	-
Incl. capital expenditure	-	-	-	-
Capital transfers	-	-	-	-
Direct investment (or GFCF)	-	-	-	-

EXPENDITURE: During FY 2019-20, total expenditure of urban subnational governments stood at 5.1% of country’s total budgetary expenditure and represented less than 1% of GDP. The breakdown of urban subnational government expenditure by economic classification is not available. However, the Ministry of Finance divides this expenditure into two categories: development and recurrent. According to the overview in the government’s 7th Five-Year Plan – assembled in the 8th Five-Year Plan – development expenditure of urban subnational governments is made on development activities i.e., physical infrastructure development, training of manpower etc., whereas recurrent expenditure is made on staff salaries, office maintenance and other such matters as may be specified by the central government. Significant difference still exists between urban and rural subnational governments in terms of expenditure.

Information on urban subnational government’s expenditure are highly fragmented and reporting standards vary from one level to another.

DIRECT INVESTMENT: No information available.

ⓘ No detailed data available for this country

Subnational government revenue by category
2019/20	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue*	44	0.9%	6.7%	100%
Tax revenue	26	0.5%	-	60.7%
Grants and subsidies	3	0.1%	-	6.2%
Tariffs and fees	0.1	0.0%	-	0.2%
Income from assets	14	0.3%	-	33.0%
Other revenues	-	-	-	-

*This amount doesn’t include central government’s grants and subsidies for development expenditure, for which data are not available

OVERALL DESCRIPTION: Urban local governments generate on average just over one third of their revenues from own sources (taxes and fees), which are only used to cover recurrent expenditure. The remaining two thirds (approximately) comes from funding in the form of grants or subsidies from the central government and other development partners (local and foreign), public transfers and private donations, in the form of aids and public funds transfers. These are used to cover development expenditures. Government aid and transfer of public funds for development expenditure is missing in the table above.

As a result, urban subnational governments are largely dependent on the central government to make up for shortfalls in revenue for development activities. The administration of the transfer of these funds to urban subnational governments is done through the block grant mechanism of the annual development programme (ADP).

Urban subnational governments are legally empowered to levy taxes and rates across their respective constituencies – similar to their rural counterparts. According to the Local Government Act 2019 (Section 89 of the Municipalities Act and Section 70 of the City Corporations Act), an urban subnational government must have a single fund known as the municipality fund into which revenue streams must be credited. Rates, taxes, tolls, fees etc., vary between city corporations and municipalities. Tariffs and fees collected by the urban subnational governments are noticeably negligible.

TAX REVENUE: In FY 2019-2020, tax revenue amounted to USD 26 PPP/inhabitant. This amount represents only 0.5% of the GDP, among the lowest in South-Asia.

The tax base, i.e., the type of taxable property and services, as well as the tax rates of all subnational governments are determined by the national government, although the Local Government Act 2009 gives all local government bodies the legal authority to change the tax bases. Since 2011, there has been an informal effort to raise taxes to improve local services in urban subnational government bodies. In the recent past - with the support of various development projects - taxation in urban subnational governments has started to be automated. The objective in this regard was to increase tax collection, eliminate tax pilferage and improve services to citizens. However, local tax management and collection in urban subnational governments remains weak due to a poor assessment system, lack of efficient manpower and corruption.

Urban subnational governments also receive a share of taxes on land transfers that take place within their boundaries, as defined by their respective laws. The share of land transfer taxes that these bodies can collect varies widely because of the amount and ratio of the direct government transfer - meaning that the lower the collection, the higher the transfer and vice versa.

GRANTS AND SUBSIDIES: The main flows of funds from the central government to urban subnational government come from the local government division and other ministries, divisions and agencies. The government allocates development funds to urban subnational government through block allocation for development assistance. There is also a discretionary fund called a “special grant” from the government, the amount of which is determined by special and political considerations - according to urban subnational government officials and elected representatives.

OTHER REVENUE: No information available.

ⓘ No detailed data available for this country

FISCAL RULES AND DEBT: According to the Local Government Act (Pourashava) (2009) and Local Government (City Corporation) Act (2009), the municipality fund is entitled to be credited with (a) the balance of leftover funds as on the coming into force of this Local Government Ordinance (2009), (b) the proceeds of all taxes, rates, tolls, fees and other charges levied by the pourashavas/city corporations, (c) all rents and profits payable or accruing to the pourashavas/city corporations from the property vested in or managed by the same, (d) all sums received by these bodies in the performance of functions under relevant ordinance or under any other law for the time being in force, (e) all sums contributed by individuals or institutions or by any local authority, (f) all receipts accruing from the trusts placed under the management of these bodies, (g) all grants made by the government and other authorities, (h) all profits accruing from investments and (i) proceeds from such sources of income as the government may direct to be placed at the disposal of the municipality.

By law, the following expenditures are charged via a municipality fund: (a) all sums to be paid to, or in connection with the employment of any government servant or any member of the pourashava/city corporation service who is or has been in the service of the same, (b) all sums that the pourashava/city corporation may be required to contribute to by the government, including for the conduct of elections, the maintenance of the pourashava/city corporation services, the auditing of accounts, and other such matters as may, from time to time, be specified by the government, (c) any sum required to satisfy any judgment, decree or award against the pourashava/city corporation by any court or tribunal and any expenditure declared by the government to be so charged, (d) if any expenditure charged on a municipality fund is not paid, the prescribed authority may, by order, direct the person or persons having the custody of the municipality fund to pay such an amount, or so much thereof as may, from time to time, be possible from the balance of the municipality fund.

The accounts of the city corporations and pourashavas are legally required to be audited yearly by the office of Comptroller and Auditor General (CAG)’s office. Relevant Local Government (2009) Acts provide the CAG with access to all relevant accounting materials and it may also examine the mayor or councillor/s, officer or employee of the municipality concerned. On the completion of audit, the CAG shall give the report to the municipality/city corporation and send a copy of the report to government. City corporations/municipalities may also form an audit and account committee of their own to audit the annual income and expenditure.

City corporations’ and pourashavas’ debt information is not publicly available.

TERRITORIAL MANAGEMENT OF THE CRISIS: Bangladesh started facing the COVID-19 crisis with a moderately sound macroeconomic position but growth plunged fast as the situation disrupted economic activity, with the pandemic compelling the central government to impose a countrywide lockdown between March 2020 and May 2020. GDP growth for the 2019-20 financial year has been re-estimated in a range of 1.6% to 1.0% - down from an initial forecast of 8.5%. To fight the pandemic, the national government formed an emergency committee headed by the prime minister with all ministers as members. It also launched a project titled “COVID-19 emergency response and pandemic preparedness”. The objective of the committee was to provide medical, logistic and administrative support to all government ministries and directorates.

Urban subnational governments have been playing three key roles with regard to COVID-19 response, namely (i) working closely with the field administration and Department of Public Health and Engineering (DPHE) in providing support to public health activities; (ii) ensuring routine and critical urban services including emergency response; and (iii) coordinating and facilitating local sectoral activities to meet citizens’ needs.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: In FY2020-21, a special allocation of around 4% of total national budget was made by the central government to fund a first set of emergency measures.

As part of the COVID-19 emergency support activities for subnational governments, the government co-financed a USD 300 million (current dollars) project with the World Bank titled “Local Government COVID-19 Response & Recovery Project”. The World Bank-supported “Social Protection” project - which was ongoing prior to the emergence of the pandemic, was also re-framed to distribute cash and food support to the most vulnerable households in municipal areas. Other central government-funded sectoral projects involving municipalities, notably in the water supply and sanitation and transport sectors, were also mobilised in response to COVID-19.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Introduction of countrywide lockdown measures resulted in a 70% decrease in urban economic activities, with severe impacts on urban poverty. Urban households engaged in informal activities were gravely impacted by the lockdown. The World Bank estimates that the income of nearly 15 million people will fall below the poverty line due to COVID-19 fallout, bringing the total number of urban poor to 27 million. Urban Bangladeshi women have suffered relatively higher job losses, especially in Dhaka and Chittagong, due to their employment in the most COVID-19 affected economic sectors, such as garments industries or as housemaids.

In this context, urban subnational governments faced a sharp fall in own-source revenues (OSRs). According to a recent study conducted on local governments in Cox’s Bazar district, from March to July 2020, pourashavas saw their annual OSRs drop in a range of 15 to 30%. This further constrained their capacity to respond to the pandemic. Gaps in funding for critical every-day municipal functions such as salaries, operation and maintenance of infrastructure have become more pronounced. For instance, none of the 328 pourashavas around the country have been able to pay full salaries to their staff since March/April 2020. This is due to reduced revenue collection, but also because municipal budgets have been diverted to meet emergency relief needs.

ECONOMIC AND SOCIAL STIMULUS PLANS: Following the special budgetary allocation mobilised in FY 2020-21, the central government has made a similar new budgetary allocation for FY2021-22. These funds are allocated to emergency health interventions related to COVID-19 (for nearly 50%), incentives for businesses (about 15%), interest subsidies for bank loans whose payment was deferred (10%), cash incentives for targeted population (Tk 2 500 per month for 5 million families or ~USD 80 PPP). They also include compensation for the families of deceased civil servants, refinancing schemes for small farmers and traders in the agricultural sector, and credit facilities for independent businesses.