[🇧🇩] Budget for 2025- 2026

Saif · Apr 29, 2025

We will focus on revenue generating initiatives in next budget: NBR chairman

National Board of Revenue (NBR) Chairman Md Abdur Rahman has hinted at tough fiscal measures in the upcoming budget aimed at boosting revenue collection. While addressing a seminar in Dhaka on Tuesday, the NBR chairman said both the chief adviser and finance adviser had instructed the formulation

thefinancialexpress.com.bd

We will focus on revenue generating initiatives in next budget: NBR chairman
FE ONLINE DESK
Published :
Apr 29, 2025 21:22
Updated :
Apr 29, 2025 21:22

National Board of Revenue (NBR) Chairman Md Abdur Rahman has hinted at tough fiscal measures in the upcoming budget aimed at boosting revenue collection.

While addressing a seminar in Dhaka on Tuesday, the NBR chairman said both the chief adviser and finance adviser had instructed the formulation of a practical and realistic budget, according to UNB.

“We will focus on revenue-generating initiatives, shunning the expenditures,” he said.

He assured the people of implementing all laws properly so that people do not feel that they are harassed.

The seminar titled Macroeconomic Partnership and Fiscal Measures was held at the Economic Reporters’ Forum (ERF) auditorium. Policy Exchange Chairman and CEO Dr Mashrur Reaz presented the keynote paper at the seminar. ERF President Doulot Akter Mala and General Secretary Abul Kashem also spoke at the event.

Stressing the importance of revenue generation, the NBR chairman warned of broader economic consequences if collection targets were not met.

Md Abdur Rahman added that splitting the NBR into two separate divisions—Revenue Management Division and Revenue Policy Division—would be challenging, although the government has finalised the plan.

The NBR chairman expressed hope about resolving issues with the International Monetary Fund (IMF), paving the way for the release of the third and fourth tranches of the $4.7 billion loan programme.

“They (IMF) are pressing us to open the exchange rate, in lieu we are placing various types of formulas, the discussion is on, we are hoping to get a good result,” he said.

He said the recent engagements with the IMF were positive and the lending agency provided several recommendations.

“We accept many of those, and what is not possible for us to take we resist them,” he said.

Abdur Rahman Khan also acknowledged that in some areas Bangladesh could not reach a consensus.“ Negotiation is going on, may be we could reach in to agreement,” he said.

Saif · May 9, 2025

Dilemmas foreshadow budget making for funding holdback

Finance officials seem in dilemmas crafting the upcoming fiscal budget with uncertainty overshadowing budget-support credits worth some billion dollars from foreign development financiers, as IMF lending stays in holdback. Officials say initially they had planned to enhance net foreign borrowings

thefinancialexpress.com.bd

Budget-support credit worth $3.0b looks uncertain
Dilemmas foreshadow budget making for funding holdback

IMF naysay may echo thru other development partners

Syful Islam
Published :
May 10, 2025 00:17
Updated :
May 10, 2025 00:17

Finance officials seem in dilemmas crafting the upcoming fiscal budget with uncertainty overshadowing budget-support credits worth some billion dollars from foreign development financiers, as IMF lending stays in holdback.

Officials say initially they had planned to enhance net foreign borrowings for financing the 2025-26 budget compared to the current budget. Some US$3.0 billion in budget support from the pipeline was expected be available soon, amid an indication that in the next fiscal year the country also may get a significant amount as budget support from the development partners.

However, with the International Monetary Fund (IMF) showing restraint from releasing fourth and fifth tranches of a $4.7-billion lending programme, amounting to some $1.3 billion, Finance Division officials are now not certain whether or not the other development partners will extend their budget support.

"We are now not confident about getting the IMF's budget-support loan as the differences are not narrowing," a senior finance ministry official told the FE, as long-drawn negotiations ended sans deals.

If the IMF does not agree to release the tranches, he feels, the other development partners also may turn their back to Bangladesh. The bilateral and multilateral development partners usually follow IMF assessment before extending any financial support to any country.

According to the finance officials, presently, apart from IMF's $1.3 billion, there is a sum of $500 million from the World Bank, $500 million from the Asian Development Bank, 400 million from the Asian Infrastructure Investment Bank (AIIB), and $250 million from Japan International Cooperation Agency (JICA) as budget support in the pipeline.

In the current fiscal budget, the net foreign-borrowing target was set at Tk 907 billion which the budget officials had planned to enhance to Tk 1.0 trillion in the upcoming budget, sources said.

On the contrary, the budget officials were planning to lower borrowing from domestic sources to Tk 1.4 trillion in the next fiscal year from Tk 1.609 trillion in the outgoing one to help higher fund flow for private-sector investment.

However, with the changed financial scenario, officials involved in budget preparation are now in a quandary as to how to finance the next budget without harming private-sector investment if budget-support loans are not given by the development partners in the few days left before the new budget rollout.

On return from the spring meetings of the IMF and the World Bank late April, Finance Adviser of the interim government Dr Salehuddin Ahmed said: "IMF doesn't agree to pay the budget-support credit, we will prepare budget on our own."

The government has already decided to trim the size of coming budget compared to the current one taking into consideration the trend of financing from home and abroad.

Dr Zahid Hussain, a former lead economist at the World Bank's Dhaka office, says unless the government gets budget credits amounting to some $3.0 billion from the development partners, they will have to cut expenditure by any means or enhance revenue collection.

He thinks achieving the big revenue-earning target the government is setting for next fiscal year will be "largely impossible".

Also, Mr Hussain foretells, unless budget-support credit is available, the government will have to depend on project aid which is only available based on project implementation.

"In that case, the government will have to depend on financing from domestic sources that means banking sector only to dry-out funds for private-sector investments," he told The Financial Express.

Mr Hussain feels this was the high time the government made the exchange rate fully market- dependent.

He mentions that the governor has recently been saying that forex supply was very good, demand was not strong, current-account balance was in positive territory, and everything was stable.

The economist also points out that dollar price has gone three years down on the international market while crude oil, gas, and coal prices have fallen, and commodity price is projected to tumble by 12 per cent in 2025.

"Thus, there is no chance of exchange-rate volatility if the control is lifted," he says, adding, "As everything is stable, the government should have taken the chance and met the IMF's requirement."

Saif · May 10, 2025

NATIONAL BUDGET FY26: Cash subsidy on exports to be slashed by Tk 1,000 crore

The government is likely to cut down on the cash incentive on exports by more than Tk 1,000 crore in the new financial year of 2025–26.

www.newagebd.net

NATIONAL BUDGET FY26: Cash subsidy on exports to be slashed by Tk 1,000 crore
Staff Correspondent 10 May, 2025, 22:32

The government is likely to cut down on the cash incentive on exports by more than Tk 1,000 crore in the new financial year of 2025–26.

Finance ministry officials said that Tk 8,000 crore was likely to be earmarked for cash subsidy to the exporters in the new budget to be announced on June 2.

The outgoing FY2024–25 budget kept Tk 9,025 crore for the same purpose.

Finance ministry officials said that this would be the second year in a row that they were reducing cash subsidies on exports as per the government policy to phase it out in near future.

Bangladesh will not be able to provide cash subsidies to the exporters once it is graduated from the least developed countries’ bloc in November 2026 as per the World Trade Organisation rules.

Ministry officials also said that exporters would be compensated for the losses of cash subsidy with policy support, such as, rebate on power bills, banks loan facilities and improving the ease of doing business.

The country is also trying to sign Free Trade Agreements with various countries to boost trade and economic cooperation in a bid to strengthen its LDC graduation.

Bangladesh has agreed to finalise a FTA with Singapore by the end of 2026, while negotiations are also underway for FTAs with China and Japan.

At present, 43 export items get cash incentive.

Ministry officials further said that the number of the items getting the cash incentives was likely to remain the same, while the rate would be slashed.

At present, cash assistance on the export earnings of apparel makers in all markets is 0.30 per cent.

The cash subsidy for entering into new markets is 2 per cent.

Agro products, potatoes and processed meat exporters enjoy 10 per cent incentive on export earnings, the highest among all sectors.

The government is providing 6 per cent case incentives on crust leather export.

Saif · May 13, 2025

The upcoming budget should deliver economic stability

Controlling inflation should be a top priority for the interim government.

www.thedailystar.net

The upcoming budget should deliver economic stability

FILE ILLUSTRATION: REHNUMA PROSHOON

As Bangladesh approaches the fiscal year (FY) 2025-26, the country stands at a critical juncture. The interim government is set to unveil a new national budget, which is expected to reflect both the pressing need for economic stabilisation and structural reform. With the economy grappling with high inflation, low revenue mobilisation, rising unemployment, persistent inequality, and the impending graduation from Least Developed Country (LDC) status, the upcoming budget is poised to address these multifaceted challenges.

The formulation of the FY2025-26 budget occurs against a backdrop of significant economic and political upheaval. The ousting of the previous government in August 2024, following mass protests, led to the establishment of an interim administration on August 5, 2025, tasked with steering the country through turbulent times.

This is reflected in the World Bank's revised economic growth forecast for Bangladesh which dropped to 3.3 percent growth of Gross Domestic Product (GDP) for FY2024-25, marking the lowest rate in 36 years. This reduction is attributed to high inflation, reduced investment, a weak financial sector, and political instability. As of April 2025, the point-to-point inflation rate stood at 9.17 percent, with a 12-month average of 10.21 percent. Although this reflects a decline from last month's 9.35 percent (point-to-point) and 10.26 percent (12-month average) respectively, inflation is still high, persisting for almost three years now. To combat inflation, the central bank has maintained a tight monetary policy, keeping the policy rate at 10 percent. These economic challenges are compounded by the upcoming graduation from LDC status in 2026, which will result in the loss of various flexibilities, including the loss of preferential market access for Bangladeshi products in developed and some developing country markets and access to finance at flexible terms.

Amid these challenges, exports have shown resilience. Export receipts during October-December 2024 increased by 5.1 percent compared to July-September 2024 and by 20.2 percent compared to October-December 2023. This is due to increased export receipts from readymade garments, jute and jute manufacturers, and fish and shrimps. Despite these gains, the readymade garment sector could face headwinds due to new US tariffs and shifting global demand, potentially impacting future export performance.

In a departure from previous expansionary budgets, the interim government plans to present a contractionary budget totalling Tk 7.90 lakh crore for FY2025-26, down from Tk 7.97 lakh crore in the current FY2024-25. This reduction reflects a strategic shift towards fiscal prudence in response to mounting economic pressures. The projected budget deficit is expected to be equivalent to about 4.6 percent of GDP. To finance this deficit, the government plans to rely on a combination of foreign borrowing, bank loans, and savings certificates. Over half of the deficit is expected to be covered by external sources. The government will have to be cautious in bank borrowing as it will increase its debt burden. Besides, funds should be available to the private sector whenever needed.

One of the challenges, as in the previous years, will be the financing of the budget from domestic sources as Bangladesh's tax-to-GDP ratio remains one of the lowest globally, which is below 8 percent according to government data. This significantly constrains the government's fiscal capacity. To address this, the National Board of Revenue (NBR) has set a revenue collection target of Tk 4.99 lakh crore for FY2025-26. The government plans to broaden the application of the standard 15 percent value-added tax (VAT) rate and reduce tax exemptions. The government aims to generate additional revenue through new tax measures and administrative improvements. However, for efficient and enhanced tax collection, the government must initiate several reforms. Key initiatives to enhance revenue mobilisation include the separation of tax policy and administration within the NBR to reduce conflicts of interest and improve efficiency. Automation of NBR and skilled human resources are other necessary measures. Without deep reform measures, tax evasion cannot be controlled. Therefore, sufficient resource allocation should be made to enhance the institutional capacity of the NBR.

Controlling inflation should be a top priority for the interim government. The new budget plans to reduce inflation to 6.5 percent by the end of FY2025-26. To achieve this, fiscal and monetary policies must be aligned. Fiscal policy should be designed in a way that ensures adequate allocations are made to priority sectors while pursuing a contractionary fiscal policy. Fiscal prudence should be ensured by avoiding excessive borrowing from the banking sector. To control inflation, the government should also closely monitor markets, investigate market manipulation, and enforce anti-trust laws with a zero-tolerance policy to prevent price gouging and ensure fair competition. The allocation for social safety net should be increased to protect vulnerable people.

In the current context, the general population expects a budget that addresses their immediate economic hardships, particularly high inflation and unemployment. There is also a strong desire for increased transparency and accountability in government spending, as well as effective implementation of development projects. The public also expects the government to take decisive action against corruption and inefficiency, which have historically plagued budget execution. The interim government is in an advantageous situation to set an example by raking such action since this government has no electoral compulsion.

The FY2025-26 budget presents a critical opportunity for Bangladesh to recalibrate its fiscal policies and lay the groundwork for sustainable economic growth. By focusing on revenue mobilisation, inflation control, and strategic investments in key sectors, the interim government can navigate the current economic challenges and set the stage for a more resilient future. The success of this budget will depend on the government's commitment to transparency, accountability, and the effective implementation of its proposed measures.

Dr Fahmida Khatun is the executive director at the Centre for Policy Dialogue.

Saif · May 13, 2025

Govt’s bank borrowing target may shrink in next budget

The government is planning to significantly reduce its bank borrowing target in the upcoming fiscal year as it aims to narrow the budget deficit by scaling down the overall budget size.

www.thedailystar.net

BUDGET FOR FY26

Govt’s bank borrowing target may shrink in next budget

The government is planning to significantly reduce its bank borrowing target in the upcoming fiscal year as it aims to narrow the budget deficit by scaling down the overall budget size.

The target is set to be slashed by nearly 25 percent in the budget for FY26, dropping to Tk 104,000 crore.

The budget deficit for the outgoing fiscal year is also likely to shrink by around Tk 30,000 crore to Tk 226,000 crore, according to a finance ministry official.

To manage the deficit in the upcoming budget, the government is expected to rely more on foreign borrowing rather than domestic sources, especially banks, as interest rates on foreign loans are comparatively lower.

The slow implementation of the Annual Development Programme (ADP) in the current fiscal year and efforts to curb inflation are also expected to contribute to a reduced bank borrowing target.

To manage the deficit in the upcoming budget, the government is expected to rely more on foreign borrowing rather than domestic sources

As a result, the national budget for FY26 is projected at Tk 790,000 crore -- Tk 7,000 crore less than the original budget for the current year, which would mark the first time in recent memory that the overall budget would see a contraction.

Zahid Hussain, a former lead economist at the World Bank's Dhaka office, said the government's move to reduce bank borrowing is linked to its lower deficit target.

"Bank borrowing should be reduced because if the government takes a large portion of available credit, the private sector won't have enough access to loans," he added.

The interest rate on treasury bonds and bills is currently very high. If banks have a greater opportunity to lend money to the government, they will be less inclined to invest in the private sector, he said.

"We will not implement the budget by borrowing from banks or printing money. This budget will be implementable," Finance Adviser Salehuddin Ahmed told journalists yesterday after a meeting of the advisory committee on public procurement.

He also said the upcoming budget would not have a large deficit, adding that the government would refrain from borrowing to finance mega projects.

Aided by bank borrowing, budget sizes have ballooned in recent years despite low revenue collection.

Total outstanding domestic borrowing stood at Tk 942,507 crore as of January 2025, up from Tk 722,591 crore in June 2021.

The government is set to borrow Tk 125,000 crore from domestic sources, including both banks and non-bank institutions in FY26. Of this, Tk 21,000 crore is expected to come from non-bank sources, such as savings instruments and treasury bond sales to corporates and individuals.

Even in the current fiscal year, the borrowing target was revised to Tk 117,000 crore from Tk 160,900 crore in the original budget due to low ADP implementation and the adoption of a tight fiscal policy.

Of this, bank borrowing was revised down to Tk 99,000 crore from the original Tk 137,500 crore.

However, bank borrowing stood at Tk 15,531 crore in the first seven months of the current fiscal year, falling far behind the revised target due to low ADP implementation.

Contrary to recent years, the government has not borrowed from the central bank during this period. Instead, it repaid Tk 59,486 crore.

"This is called quantitative tightening, which supports the implementation of a contractionary monetary policy and helps reduce inflation," Hussain said.

The government also repaid more than it borrowed from savings instruments during the same period. Sales of savings instruments stood at Tk 36,463 crore, while repayments against the principal amounted to Tk 43,476 crore.

Hussain said this was due to a decline in people's savings, driven by high inflation.

The government borrowed Tk 31,625 crore from treasury bills and bonds in the last seven months.

"This trend will be instrumental in introducing a secondary bond market," Hussain added.

However, the government's borrowing from commercial banks reached Tk 75,018 crore as of January this year.