[🇧🇩] Budget for 2025- 2026

[Saif]

Date of Event: Mar 3, 2025

Source : https://www.newagebd.net/post/country/259214/fy26-budget-to-prioritise-reform-initiatives Short Summary: Everything about 2026 budget.

FY26 budget to prioritise reform initiatives
Shakhawat Hossain 02 March, 2025, 23:39

The national budget for the forthcoming financial year of 2025-26 will focus on the reform initiatives taken by the interim government aiming at ensuring good governance, eradicating poverty and curbing discrimination to achieve an inclusive economic growth in the country.

Officials referring to a directive given by finance secretary Khairuzzaman Mozumder in the past month said that all ministries and divisions were asked to send information linked to reform programmes taken by the interim government that assumed power on August 8, 2024 after the ouster of autocratic Awami League regime in a mass uprising in July-August past year.

The ministries and divisions have been asked to send the information by March 15, added the officials.

Finance adviser Salehuddin Ahmed, who is expected to announce the national budget on June 5, in his speech would give the updates on reforms in the areas of good governance, inclusive growth and poverty alleviation.

Economists said that it would be highly interesting to know about the reform programmes taken by the ministries and divisions since the national budget would be the first major government document to follow up the spirit of the mass uprising.

People are yet to know about priority reform agendas of the different ministries and division, said former World Bank Dhaka Office chief economist Zahid Hussain.

Besides, people will be able to learn the interim government’s views on mass uprising, to be reflected in the budget speech, he added.

Economists said that the narratives of uprising available in the government documents had so far been prepared by the task forces and commissions led by economists, academicians, law experts and former bureaucrats.

Officials said the finance secretary issued the directive after placing an outline of the new budget before interim government chief adviser Professor Muhammad Yunus on February 5.

They said that the chief adviser suggested a proper reflection of the uprising spirit in the budget document.

It has been reported that the chief adviser directed ministers and divisions to select at least one reform programme out of the recommendations made by the task force on re-strategising the economy and mobilising resources for equitable and sustainable development.

The task force’s recommendations include new institutions in the civil aviation sector, postgraduate education, research in science, technology, engineering and mathematics, information and communication technology and artificial intelligence.

To tackle the issue of over-regulation and bureaucratic hurdles that have long hindered business growth, the task force proposes the creation of a regulatory reform commission tasking it with evaluating and streamlining regulations across sectors, including business operations and taxation.

The finance secretary also sought information regarding the measures taken by the ministries and divisions on the country’s graduation from the least developed country status in 2026.

The government needs to bring about changes in incentives for the export-oriented sector in the budget since the graduation would restrict the facilitating of direct cash subsidy.

Besides, the country would loss preferential tariff in sending goods to the developing and developed countries.

Economists said that the country was in a favourable position to complete graduation from the LDC status.

Some sections of stakeholders have demanded deferring the graduation process, citing disruption in businesses, said Centre for Policy Dialogue distinguished fellow Mustafizur Rahman.

He said that the FY26 budget document should disseminate updates from the ministries and division on the important national issue.

Officials said the finance ministry had planned a big outlay of about Tk 8.5 lakh crore for the 2025-26 financial year, aiming at encouraging business activities.

They said that emphasis would be given on the generation of more revenue by the National Board of Revenue to support the big expenditure plan.

The provisional target for the NBR has been set at Tk 5.2 lakh crore.

The annual development expenditure in FY26 would be close to a third of the total outlay with focus on job creation projects in sectors like education, health and social safety net.​

 

[Saif]

PRE-BUDGET DISCUSSION: Next budget may see cut in tax exemptions: NBR chair

National Board of Revenue Chairman Md Abdur Rahman Khan on Wednesday hinted that the tax exemption system might be removed in the forthcoming national budget...

www.newagebd.net

PRE-BUDGET DISCUSSION: Next budget may see cut in tax exemptions: NBR chair
Staff Correspondent 05 March, 2025, 22:29

Md Abdur Rahman Khan

National Board of Revenue Chairman Md Abdur Rahman Khan on Wednesday hinted that the tax exemption system might be removed in the forthcoming national budget.

He also said that, following this, the NBR had already withdrawn significant tax exemptions.

He said these at a pre-budget meeting with the Bangladesh Export Zone Authority, the Bangladesh Economic Zone Authority, the Bangladesh Investment Development Authority and the Bangladesh Hi-Tech Park Authority.

Some chambers and economic research institutions, including Business Initiative Leading Development, Bangladesh India Chambers of Commerce, Women Entrepreneurs Network for Development Association and American Chamber of Commerce in Bangladesh, were present during the discussion.

The NBR chairman said that the amount of tax that the government was getting now was almost equal to what it was losing due to tax exemptions.

‘We have to come out of this practice. We are facing huge pressure for this,’ he added, saying that they could provide support for a limited time, not for the whole life, as one should pay taxes at the regular rate.

He also said that individuals and business entities paying a reduced rate of taxes would have to pay a little bit more from the next budget and the NBR’s big target was to streamline the tax system for those who had been enjoying tax exemptions for a long time.

He said that the tax exemption would be withdrawn gradually.

In the discussion, BUILD proposed setting a flat VAT rate at 10 per cent, suggesting that it could help improve the government’s revenue collection.

BUILD said that in addition to the 15 per cent universal VAT rate, there were seven other rates: 1.5 per cent, 2 per cent, 2.4 per cent, 4.5 per cent, 5 per cent, 7.5 per cent and 10 per cent. This brings the total to eight different VAT rates and Section 46(1) of the VAT Law does not allow VAT credit or rebates for rates below 15 percent, it added.

Currently, 53 per cent of economic activities fall outside the VAT system, while the remaining 47 per cent are subject to varying rates across three levels and the rebate system remains largely ineffective, which discourages taxpayers from joining the VAT network.

AmCham emphasised the need for tax reforms and business-friendly policies in their budget proposals for the 2025-26 financial year.​

 

[Saif]

Annual budget not to rise in FY26 due to financial crisis

According to finance ministry sources, the budget will prioritise rural infrastructure to generate employment.

en.prothomalo.com

Annual budget not to rise in FY26 due to financial crisis
Fakhrul Islam
Dhaka
Published: 12 Mar 2025, 17: 53

Salehuddin Ahmed File photo

The government has decided to downsize the annual budget in the upcoming 2025-26 fiscal year. Low revenue collection, sluggish growth in tax and duties, and rising foreign loan repayments prompted the authorities to take this decision.

According to finance ministry sources, the next budget is likely to be similar to the current one, or lower than it, as the government decided not to increase the annual budget.

The budget for the current 2024-25 fiscal year was originally set at Tk 7.97 trillion, but the interim government has taken an initiative to revise it down to Tk 7.5 trillion. The previous fiscal year (2023-24) had a budget of Tk 7.61 trillion, and it was later reduced to Tk 7.14 trillion.

Regarding the upcoming budget, finance adviser Salehuddin Ahmed told Prothom Alo that they have to downsize the next budget due to various reasons, while the Annual Development Programme (ADP) will also face cuts. No new major projects will be undertaken, but funding for ongoing large-scale projects will continue.

According to finance ministry sources, the budget will prioritise rural infrastructure to generate employment.

In this regard, adviser Salehuddin Ahmed said the rural infrastructure sector has long been overlooked. They will try to raise allowances of social safety beneficiaries and meet the demands of the teachers in the new budget.

He also indicated that there will be reflections of the July movement spirit and recommendations of the white paper formulation committee and the task force.

Despite the budget constraints, expenses on salaries, allowances, and domestic and foreign debt repayments will see a slight rise. However, there will be no significant increase in development spending.

Budget presentation

With no functioning national parliament, finance adviser Salehuddin Ahmed will present the budget on television in early June, and it will be endorsed through an ordinance by the president. Typically, the finance minister presents the budget before the parliament. Since there is no political government, the budget will be presented before the nation through television, similar to instances in the previous caretaker governments.

Low flow of money

The National Board of Revenue (NBR) arranges a major portion of the annual budget. Its revenue collection target for the current fiscal year was Tk 4.8 trillion, and it was later revised to Tk 4.63 trillion. In the first seven months (July-January), the revenue board collected only Tk 1.96 trillion, falling short by Tk 510 billion.

Letter to all secretaries

The authorities have already started writing the budget speech. To ensure an inclusive budget speech, finance secretary Khairuzzaman Mozumder issued letters to secretaries of all ministries to submit proposals concerned with their respective sectors by 15 March.

Target to bring down inflation

The government aims to reduce inflation to 7 per cent in the next budget, down from the persistent double-digit rates recorded over the past year. Last month, inflation finally dropped below 10 per cent after 10 consecutive months.

The budget deficit for the current fiscal year was estimated at Tk 2.56 trillion, or 4.6 per cent of GDP. The government is planning to keep the next year’s deficit below 5 per cent of GDP. The GDP growth target for the 2025-26 fiscal year is being set at 5.5 per cent.

Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), said the authorities created confusion with large budgets in the last 15 years, despite having no ability for implementation. From this point of view, a smaller budget is better.

“We hope the finance advisor will be able to present a good budget with reflections of the recommendations of the financial task force and the white paper formulation committee,” he said.​

 

[Saif]

Budget slashed by Tk 53,000cr

The government on Wednesday revised down the 2024-25 financial year budget by 6.6 per cent, or Tk 53,000 crore, to Tk 7,44,000 crore because of a shortage of resources, said officials...

www.newagebd.net

Budget slashed by Tk 53,000cr
Staff Correspondent 13 March, 2025, 00:17

The government on Wednesday revised down the 2024-25 financial year budget by 6.6 per cent, or Tk 53,000 crore, to Tk 7,44,000 crore because of a shortage of resources, said officials.

The Awami League government that was ousted on August 5, 2024 in a mass uprising had announced an outlay of Tk 7,97,000 crore for the current financial year (FY 25).

The interim government that assumed power on August 8 cut the outlay, reshaping it in the last quarter of the financial year to be ended in June.

However, the size of revision in the FY25 is less than that of the FY24.

Former finance minister Ali Hassan Mahmood Ali, who announced the last budget of the AL’s 15-year long regime, trimmed down the FY24 budget by Tk 57,000 crore.

Officials said that the Finance Division on Wednesday announced the revised budget authority for FY25, asking ministries and divisions to maintain the revised allocations.

The division also asked ministries to send back the money withdrawn from the previous allocations.

With the revision, the overall budget deficit has been reduced to Tk 2,26,000 crore from projected Tk 2,56,000 crore.

The major cut in the FY25 budget is attributed to downsizing the annual development programme by Tk 49,000 crore.

In the past week, the National Economic Council in a meeting revised down the ADP to Tk 2,16,000 crore from Tk 2,65,000 crore.

The overall revenue income has been revised at Tk 5,18,000 crore from projected Tk 5,41,000 crore.

Officials said that the National Board of Revenue facing a shortfall over Tk 50,000 crore in revenue collections in the first half of the FY25 had been given a revised target of Tk 4,63,000 crore from projected Tk 4,80,000 crore.

Earlier in December 2024, a meeting of the coordination council on macro-economy and resource management revised down the growth rate of the country’s gross domestic product to 5.2 per cent from earlier 6.8 per cent for FY25.

The next meeting of the coordination council will take place in the next month to draw the outline of the new national budget, the first under the interim government.​

 

[Saif]

Govt plans smaller budget with 6% GDP growth target

The interim government is planning to prepare a small budget with a 6 percent GDP growth target for the next fiscal year considering the sluggish economy and low revenue collection.

www.thedailystar.net

Govt plans smaller budget with 6% GDP growth target

The interim government is planning to prepare a small budget with a 6 percent GDP growth target for the next fiscal year considering the sluggish economy and low revenue collection.

Officials said the finance ministry has already started working to this end after receiving directives from the chief adviser, with Finance Adviser Salehuddin Ahmed set to begin pre-budgetary meetings with different stakeholders from next week.

Ahmed will preside over the series of meetings, the first of which will be held on Sunday featuring various economists. Later, the finance ministry will call upon business leaders, economic reporters and related other individuals.

But as the country's parliament is absent, he may announce the proposed budget for fiscal year (FY) 2025-26 on air.

Ahmed said they will complete the pre-budget meetings by April.

Finance Adviser Salehuddin Ahmed is set to begin pre-budgetary meetings with different stakeholders from next week

"No ambitious goals will be set in the upcoming national budget, and the GDP growth target will be set lower," he told The Daily Star.

Officials of the finance ministry said they had a long discussion with the Chief Adviser Prof Muhammad Yunus last month, where they presented a draft plan for formulating the budget.

The chief adviser then issued directives for the draft plan and those are now being incorporated, according to a senior official of the finance ministry.

As per the current plan, the GDP growth target for FY26 will be set at 6 percent, which is lower than the 6.75 percent being targeted in this year's budget.

However, the GDP growth target could be lowered to 5.25 percent in the revised budget for FY25 considering the damage caused by multiple floods and the interim government's contractionary monetary policy aimed at containing inflation.

Besides, GDP growth in the ongoing fiscal year is low as there was political unrest and an unstable business environment. But the growth will likely be higher next year thanks to gradual improvements in the economic environment, the officials said.

Multilateral lenders like the World Bank, International Monetary Fund and Asian Development Bank have also forecasted lower growth for the current fiscal year and enlarged the growth for the next.

Meanwhile, the targeted inflation rate for FY26 may rise to 6.5 percent while it was around 8 percent in the budget for the ongoing year.

The previous government had fixed the inflation target at 6.5 percent in the original budget.

The size of the draft budget presented to the chief adviser last month was about Tk 8.48 lakh crore, including an allotment for Annual Development Programmes (ADP) worth Tk 2.7 lakh crore.

Finance ministry officials said the chief adviser directed them to cut the budget short even further, which may result in it reaching Tk 8 lakh crore while the ADP size may remains Tk 2.4 crore.

The current fiscal years' original budget was Tk 7.97 lakh but was later revised by the interim government at Tk 7.44 lakh crore.

"Though the budget size increases every year, the upcoming budget may be down from the previous year's original budget," the official said.

Adviser Ahmed did not name the number, but he did say the size would not be much more than the current fiscal's budget.

"We will also prepare the ADP allocation pragmatically," he said.

The ADP allocation was Tk 2.65 lkah crore in the original budget, which was revised by Tk 2.16lakhn crore.​

 

[Saif]

PRE-BUDGET DISCUSSION: Tax exemption will be phased out: NBR

National Board of Revenue chairman Abdur Rahman Khan said that the tax on taxpayers who had been enjoying the reduced rate will gradually increase...

www.newagebd.net

PRE-BUDGET DISCUSSION: Tax exemption will be phased out: NBR
Staff Correspondent 13 March, 2025, 22:29

New Age file photo

National Board of Revenue chairman Abdur Rahman Khan said that the tax on taxpayers who had been enjoying the reduced rate will gradually increase.

He also said that now was the time to expand the tax rate, and the NBR has to phase out the facilities of tax exemptions. ‘Everyone must pay tax’, he said.

He said this while speaking at the pre-budget discussion with several associations and trade bodies at the NBR office in the capital on Thursday.

Abdur Rahman Khan also said that the government was working to reduce the harassment of the taxpayers and make it fully automated.

‘We know that the main obstacle is the calculation, legal and rules related knowledge and so on. But if we can once make it fully automated, these issues will be abolished,’ he added.

He also urged the businesses to assist the government in expanding the tax net.

He revealed these while the trade bodies presented their budget proposal for the upcoming fiscal year 2025-26 national budget.

In their budget proposal, the Bangladesh Textile Mills Association urged the government to impose a ban on importing yarn through land ports.

They also urged reducing the source at tax to 0.5 per cent from the existing 1 per cent and the raw material supplying tax to 0.5 per cent from the existing 3 per cent.

They proposed a VAT exemption on waste-based recycled fiber production and supply for yarn manufacturers, reducing the current 15 per cent rate.

They also demanded abolishing the advance tax on importing equipment and other items, which is currently 3 per cent and 5 per cent, respectively.

BTMA urged the government to exempt VAT on importing ETP materials like membranes, blowers, etc.

They also proposed to include electric panels, solar systems, and photovoltaic cells as capital machinery and impose a uniform custom duty of 1 per cent.

Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association also demanded reducing source at tax to 0.5 per cent from the existing 1 per cent.

They also appealed for reducing the source tax on profit and interest in the companies’ savings and fixed accounts to 10 per cent from the existing 20 per cent.

They also sought the opportunity for the sister concerns to use the raw materials imported by the same group.

Bangladesh Terry Towel and Linen Manufacturers and Exporters Association urged the government to abolish the 31 per cent and 37 per cent tax in importing 10 and 20 count yarn respectively.

They also demanded reducing the tax at source of the terry towel and home textile sector to 0.5 per cent from the existing 1 per cent.

Bangladesh Plastic Goods Manufacturers and Exporters Association urged the government to reduce the import duty to 3 per cent from existing 5 per cent in importing 14 basic raw materials of the plastic sector.

Bangladesh Frozen Foods Exporters Association proposed reducing advance income tax to 0.25 per cent from the existing 1 per cent.

They also proposed exempting 10 per cent advance income tax on cash incentives.

The trade bodies urged the government to introduce bonded warehouse facilities for the manufacturers other than the readymade garment sector.

NBR chairman Abdur Rahman Khan hinted that his office was working to allow partial bonded warehouse facilities for the other sectors and hoped to announce this in the upcoming budget.​

 

[Saif]

Revenue shortfall may soar to Tk 1.05t in FY25

Government revenue shortfall could soar to Tk 1.05 trillion at the end of this fiscal year even after factoring in the potential sources to boost collection, says the CPD about state of the outgoing fiscal while drawing next national budget's outlook. The Centre for Policy Dialogue (CPD) m

thefinancialexpress.com.bd

Revenue shortfall may soar to Tk 1.05t in FY25
CPD says about outgoing fiscal, draws next budget outlook
FE REPORT
Published :
Mar 17, 2025 00:01
Updated :
Mar 17, 2025 00:01

Government revenue shortfall could soar to Tk 1.05 trillion at the end of this fiscal year even after factoring in the potential sources to boost collection, says the CPD about state of the outgoing fiscal while drawing next national budget's outlook.

The Centre for Policy Dialogue (CPD) mentioned Sunday that the revenue collection grew by just 4.4 per cent between July and December in the financial year 2024-25.

"To meet this fiscal year's revenue target, collection needs to be increased by more than 55 per cent in the remaining period, which is virtually impossible even after considering all potential sources," CPD Executive Director Dr Fahmida Khatun told a media briefing on recommendations for the FY26 national budget of Bangladesh at its office in the capital.

She made several recommendations and observations regarding the fiscal and economic challenges. She emphasised the National Board of Revenue (NBR) must undergo modernisation, leveraging the latest technology, to establish a hassle-free tax system.

The CPD proposed raising the tax-free income threshold to Tk 400,000 from the current Tk 350,000 in the next budget, citing high inflation and the fact that many people are now withdrawing funds from savings to cover daily expenses.

Dr Khatun said the highest income-tax rate should be raised to 30 per cent from the existing 25 per cent.

She also expressed scepticism about the central bank's expectation of lowering inflation within this fiscal year, warning that multiple risks - including US President Donald Trump's tariff wars - could complicate economic stability.

The CPD suggests that income tax should be prioritised, while the dependence on indirect taxes, such as VAT, should be reduced. It proposes lowering the VAT rate to 10 per cent from the existing 15 per cent, which may help reduce tax evasion.

To support the growth of small and medium enterprises (SMEs), the think- tank recommends they be nurtured and granted bonded-warehouse facilities for raw-material imports.

About further dos in the next budget it also says bonded-warehouse licences should be issued for longer terms as the current short terms create unnecessary administrative burdens for businesses.

Responding to questions from journalists, CPD Distinguished Fellow Dr Mustafizur Rahman said food and other essential commodities used to be controlled by a very small number of importers in the past, creating monopolistic market conditions. "Now, the supply base has expanded, which is a positive sign for the food-supply chain."

However, he stresses careful management is a must in the upcoming Boro season to ensure proper supply of fertilisers and other essential inputs, which would help secure a bumper harvest.

Addressing concerns raised by some quarters about seeking an extension of the least-developed country (LDC) graduation timeframe, Dr Rahman said Bangladesh can no longer step back as it has already met all three graduation criteria.

He reminds that Europe and Canada have assured Bangladesh of continuing to offer the same trade facilities for three years after its formal graduation in November 2026.

Dr Rahman emphasises this is the right time to take bold steps to reform the revenue structure. He also notes the NBR recently split its policy and implementation wings, which had often created conflicts of interest earlier.

The CPD executive director called for redefining the definition of "company" under its latest act as the current one includes both profit and non-profit organisations, leading the NBR to impose taxes on the latter unfairly. She highlights that budget-financing pressure is mounting as the fiscal deficit surged more than fourfold in the first half of this fiscal year, surpassing Tk 295 billion.

The policy think-tank cautions that GDP growth may fall short even of its revised projection of 5.5 per cent as the economy expanded by only 1.8 per cent during the July-September quarter of this financial year.

It also observes that Bangladesh's net foreign assets have declined, primarily due to reduced budgetary support from international sources, while net domestic assets have surged as the central bank fed funds to the struggling banks.

The CPD stresses the upcoming LDC graduation would require significant tax rationalisation to comply with the World Trade Organisation (WTO) rules.

"We believe the next budget should prioritise LDC graduation," Dr Khatun notes.

She forewarns that Bangladesh would face higher export tariffs in Europe and American economies in the post-graduation era and need to adjust domestic tariff protection for local industries.

Foreign borrowing sources would become more expensive, forcing the government to rely more on domestic sources, particularly the banking sector, she predicts. The CPD says the banking sector could come under pressure to finance budget implementation. It recommends customs duties, which remain excessively high, be rationalised.

The think-tank also has proposed phasing out cash incentives for export earnings, including in the ready-made garment sector, and offering in-kind support to enhance competitiveness on the global market.

It proposed allocating funds for the families of those martyred in the 2024 July-August movement.

The CPD deplores that Bangladesh, particularly Dhaka, often makes headlines for air pollution and urges the government to address this issue in the next budget with proper allocations and measures.

It also stressed focus on renewable energy and tackling plastic pollution.

The think-tank points out that Bangladesh and India share 54 common rivers and emphasises the need for bilateral discussions on reducing plastic pollution as waste thrown in one country often ends up in the other through rivers.​

 

[Saif]

Upcoming budget must prioritise ordinary people’s concerns

AMID growing income inequality, high unemployment rates and unprecedented food inflation, economists have rightly pointed out that the budget for the next financial year should prioritise the economic woes of the ordinary people. Economists in a pre-budget meeting with the finance adviser on...

www.newagebd.net

Upcoming budget must prioritise ordinary people’s concerns
18 March, 2025, 00:00

AMID growing income inequality, high unemployment rates and unprecedented food inflation, economists have rightly pointed out that the budget for the next financial year should prioritise the economic woes of the ordinary people. Economists in a pre-budget meeting with the finance adviser on March 16 urged the government to create an enabling investment environment to boost growth in the job market. The policy emphasis on job creation is more than justified given that the unemployment rate, according to the Bangladesh Bureau of Statistics, rose to 4.49 per cent in the July-September quarter of 2024 from 4.07 per cent a year earlier. Recently, a sharp increase in high-value accounts has also been reported, suggesting a concentration of wealth and a lack of investment opportunity. In July-December 2024, private sector credit flow saw a steady decline, indicating a stagnant business environment, which is concerning when the private sector employs about 90 per cent of the workforce. The government should therefore work towards creating an enabling investment environment to facilitate growth in the job market.

Economists have also asked the government to take measures for the expansion of the direct tax, reducing dependency on indirect tax to give people already suffering from the unprecedented inflation some relief. The heavy reliance on indirect taxes, such as VAT and customs duty, makes the current tax structure regressive and less effective in drawing income from higher-income individuals and businesses. In the past, the budgetary allocation for social safety net programmes has been insignificant. According to a recent World Bank report, Bangladesh spends 2 per cent of its gross domestic product on social protection, which includes social assistance, public service pensions and subsidies. With pension and other forms of social assistance being excluded, the amount that vulnerable people receive would be 1.5–1.7 per cent of the gross domestic product. It is widely reported how most of the social assistance programmes have limited coverage and do not often reach the target population. In this context, economists have urged the government to revisit the loopholes in the social safety net programmes so the past abuses of power and corruption are eliminated from the process and the benefits of such programs reach their intended population.

As the interim government is preparing the national budget for the upcoming financial year, it should consider bridging the income inequality as its priority policy goal and ensure that budget serves the interest of the people. In doing so, it must work towards creating an enabling investment environment to facilitate growth in the job market and reform its tax regime, which is largely dependent on indirect tax. The expansion of social safety net programmes also deserves equal policy attention.​

 

[Saif]

Prudent budget planning is essential

CPD’s emphasis on macroeconomic stability amid LDC graduation concerns

www.thedailystar.net

Prudent budget planning is essential
CPD’s emphasis on macroeconomic stability amid LDC graduation concerns

VISUAL: STAR

In a number of pre-budget discussions in the capital on Sunday, economists rightly stressed the need for designing the national budget for the upcoming fiscal year in a way that prioritises macroeconomic stability. They also emphasised the need for tax policy revision and tariff reforms in line with the World Trade Organization (WTO) regulations to aid in Bangladesh's preparation for graduating from the Least Developed Country (LDC) bracket in November 2026. Given the the country's ongoing economic challenges, we believe these recommendations are timely and should be considered.

In its discussions, the Centre for Policy Dialogue (CPD) said targeted interventions are required to address the economic challenges, and these should be incorporated into the new budget to ensure fiscal prudence—maximising the use of our scarce resources. At the same time, as Bangladesh transitions into a developing economy, it must phase out direct export incentives to meet WTO standards and employ alternative WTO-compliant measures. Revision of agricultural trade policies, elimination of minimum import prices on certain goods, and adjustment of tariff structures to keep custom duties aligned with the bound tariff commitments that Bangladesh made under the WTO agreements are also necessary for maintaining compliance in the post-LDC graduation scenario. Ensuring WTO compliance is of utmost importance as Bangladesh is set to lose the perks and waivers that come with the LDC status. CPD also advised the government to plan for legal counselling, in-depth trade policy analysis, and proper dispute resolution mechanisms—steps essential for securing a favourable position in trade relations with other nations.

Targeted interventions are required to address the economic challenges, and these should be incorporated into the new budget to ensure fiscal prudence—maximising the use of our scarce resources. At the same time, as Bangladesh transitions into a developing economy, it must phase out direct export incentives to meet WTO standards and employ alternative WTO-compliant measures. Revision of agricultural trade policies, elimination of minimum import prices on certain goods, and adjustment of tariff structures to keep custom duties aligned with the bound tariff commitments that Bangladesh made under the WTO agreements are also necessary for maintaining compliance in the post-LDC graduation scenario.

Meanwhile, at another discussion with the government, the CPD chief suggested formulating strict legislation to prevent tax evasion, track wealthy tax dodgers, and increase revenue through direct taxation. Bangladesh has long had one of the lowest tax-GDP ratios in the world. It's high time this was corrected, and to do so, the authorities must ensure that all eligible taxpayers, including influential individuals, are held accountable. Moreover, the recent increase in VAT and supplementary duties should be reconsidered—something that we have also stressed for quite some time—as raising revenue through indirect taxes is placing undue burdens on ordinary and poor citizens already struggling with high inflation.

These are all recommendations worth serious consideration. As the next fiscal year is going to be a crucial one amid all the uncertainties caused by the July uprising, the national budget must reflect prudent and strategic thinking on the government's part. Long-term policies to address persistent and potential setbacks should be integrated into budget preparations to ensure Bangladesh is adequately prepared for the challenges that lie ahead.​

 

[Saif]

Next budget to focus on curbing inflation

Finance Adviser Salehuddin Ahmed yesterday said the interim government will not incorporate any mega projects that cost billions of dollars in the next budget for FY2025-26.

www.thedailystar.net

Next budget to focus on curbing inflation
Finance adviser tells senor journos

Finance Adviser Salehuddin Ahmed yesterday said the interim government will not incorporate any mega projects that cost billions of dollars in the next budget for FY2025-26.

"We will not undertake monumental projects costing $10-$12 billion in the upcoming budget. Instead, we will take projects that create employment."

He made the remarks during a pre-budget meeting with editors and senior journalists from print, online, and electronic media held at his office at the Secretariat in the capital.

He said the next budget will be realistic and people-centric.

"We will not formulate a budget that an elected government would throw away," said the finance adviser, adding that the upcoming budget will mainly focus on controlling inflation, not driving economic growth.

Finance Secretary Khairuzzaman Mozumder expressed optimism that inflation could be brought down to 8 percent by June this year.

During the meeting, editors suggested several measures, including steps to control inflation, expanding the social safety net programmes, raising the tax-free income limit to at least Tk 5 lakh, and increasing allocations for health and education sectors.

The editors and senior journalists also mentioned various challenges faced by the media, including high taxes levied on the newspaper industry.

In response, the finance adviser assured them that challenges faced by newspapers, television, and online platforms would be taken into consideration in the budget.

The finance adviser emphasised that allowances under social safety net programmes would be increased, but the extent would depend on the availability of resources.

Financial Express Editor Shamsul Haque Zahid suggested that the interim government, which will present the budget in June, should formulate a budget that the next government can implement, especially considering the possibility of elections later this year.

He also recommended a realistic approach to budgeting given low revenue earnings.

Abdul Hai Shikdar, editor of Daily Jugantor, proposed increasing the tax-free income threshold above Tk 4 lakh.

Zakir Hossain, associate editor of Daily Samakal, said that the newspaper industry faces a total import tax of 31 percent on newsprint, and despite repeated requests over the years, no steps have been taken to reduce it.

He further said allowances in the government's social security programmes are very low, suggesting increasing the allowances to at least Tk 3,000 per month.

Shawkat Hossain, online editor at the daily Prothom Alo, emphasised that job creation should be a major focus of this budget.

He also suggested shortening the budget speech.

In response, the finance adviser agreed to reduce its length to 50-60 pages.

Mizanur Rahman, head of operations at The Daily Star, stressed the need to incorporate automation into the operations of the National Board of Revenue in the next budget to enhance its efficiency.

Mostafa Kamal, editor of Daily Khaborer Kagoj, and Syed Shahnewaz Karim, acting editor of Daily Shomoyer Alo, also spoke at the meeting.​

 

[Saif]

Next national budget will be business-friendly: Adviser Salehuddin

Finance Adviser Salehuddin Ahmed on Thursday assured that the upcoming national budget will be business-friendly, incorporating a favourable tax policy to boost investment, GDP growth, and employment generation. “We will present a business-friendly budget with a favourable tax policy to enha

thefinancialexpress.com.bd

Next national budget will be business-friendly: Adviser Salehuddin
FE Online Desk
Published :
Mar 20, 2025 19:38
Updated :
Mar 20, 2025 19:38

Finance Adviser Salehuddin Ahmed on Thursday assured that the upcoming national budget will be business-friendly, incorporating a favourable tax policy to boost investment, GDP growth, and employment generation.

“We will present a business-friendly budget with a favourable tax policy to enhance overall investment, GDP, and employment. The business community has provided us with a set of practical suggestions,” he told reporters after a pre-budget meeting with business leaders at the Finance Division Conference Room at the Bangladesh Secretariat, UNB reports.

Salehuddin said the business community has urged the government to lower tax rates across various sectors and streamline tax payments through online platforms.

Regarding customs procedures, he noted that the government would consider the business community’s suggestions concerning the Harmonized System (HS) code.

Bangladesh Chamber of Industries (BCI) President Anwar-Ul-Alam Chowdhury said the discussion mainly focused on National Board of Revenue (NBR)-related issues, particularly income tax.

“The finance adviser appeared positive, emphasising that the NBR should strengthen efforts in revenue mobilization and tax collection. However, our primary concern remains enhancing industrial competitiveness,” he said.

Chowdhury added that the finance adviser requested written proposals regarding banking sector issues and fiscal support.

Leaders from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), and Bangladesh Textile Mills Association (BTMA) also placed their suggestions during the meeting.

BCI President Anwar-Ul-Alam Chowdhury stressed the importance of aligning tax assessment with international practices, to which the Finance Adviser agreed.

BKMEA President Mohammad Hatem expressed optimism that the meeting would lead to positive changes in the taxation system, as assured by the NBR Chairman.

“We requested a revision of the provision requiring a 1 per cent Advance Income Tax. Tax should be paid on profit, but currently, tax is deducted at source on total sales,” Hatem said.

While the business leaders did not propose changes to corporate tax rates, they advocated for reducing VAT in specific sectors. They also recommended standardizing the HS code to six digits for efficient customs clearance under the bond management system.

Hatem noted that the business community appreciated improvements in services at Chattogram Customs House. He urged the government to simplify VAT regulations and HS code complexities.

Additionally, the BKMEA requested direct cash incentives on export proceeds to avoid procedural complications.

In a formal proposal, the BKMEA suggested maintaining the source tax for the Ready-Made Garment (RMG) sector at 0.5 per cent for the next five fiscal years (until FY30), treating it as the final tax realization.

They also demanded a business-friendly taxation policy, necessary reforms, and full VAT exemption on products and services related to 100 per cent export-oriented RMG industries.​

 

[Saif]

Next budget likely Tk 7.92t with doable Targets

Bangladesh's upcoming budget may be Tk 7.92 trillion in size, smaller than the current one, as the interim government walks a tightrope amid a subdued trend in revenue earnings and foreign-aid inflow in the present context. Officials give the possible budgeting outlook, saying that this is for the

thefinancialexpress.com.bd

Taming inflation to 6.5pc pivotal promise
Next budget likely Tk 7.92t with doable Targets
ADP Tk 2.3t, GDP growth target modest 5.5pc

Syful Islam
Published :
Apr 11, 2025 23:50
Updated :
Apr 11, 2025 23:50

Bangladesh's upcoming budget may be Tk 7.92 trillion in size, smaller than the current one, as the interim government walks a tightrope amid a subdued trend in revenue earnings and foreign-aid inflow in the present context.

Officials give the possible budgeting outlook, saying that this is for the first time Bangladesh is framing a smaller budget compared to the previous one, as the government also takes into consideration slower implementation of the current budget.

A technical committee meeting on budgeting at the ministry of finance made the decision Wednesday. The committee for coordination on fiscal, monetary, and currency exchange, headed by finance adviser Dr Saleh Uddin Ahmed, will take the final decision on the budget for the fiscal year 2025-26.

The national budget for the outgoing financial year, 2024-25, is worth a total of Tk 7.97 trillion. Its size was revised down by Tk 490 billion with cuts from the original annual development programme (ADP) of Tk 2.65 trillion. Finance Ministry sources have said the National Board of Revenue may be given a daunting task of collecting Tk 5.10 trillion in the next fiscal year, up from Tk 4.80 trillion in the current year.

The ADP outlay may be fixed at Tk 2.30 trillion for the next fiscal year, according to officials concerned.

The government may set GDP (gross domestic product) growth target at 5.5 per cent in the next fiscal year, compared to 6.75 per cent in the outgoing fiscal year.

Officials say in the next budget the government may set a target of bringing down the rate of inflation to 6.5 per cent, similar to the current budgetary target. In the current fiscal year until March, inflation remained defiant of the target to hover between 11.66 per cent and 9.32 per cent.

Also, the government plans to keep budget deficit below 4.0 per cent against 4.6% of the GDP in the current fiscal year, according to officials concerned.

Finance officials say the major target to be laid in the next fiscal budget will be lessening inflation and enhancing budget implementation.

They say against the budgetary target of Tk 4.80 trillion, the National Board of Revenue until this February, could generate Tk 2.21 trillion. At the end of the fiscal year, they predict, the NBR "may end up collecting Tk 4.0 trillion at best, which is significantly lower than the revised target of Tk 4.635 trillion".

The ADP implementation until February was below 25 per cent-the lowest tally in 14 years-as official data showed.

As such, they say, funding a big budget in the next fiscal year will be difficult and such a big budget will remain largely unimplemented.

Dr Fahmida Khatun, executive director at the Centre for Policy Dialogue (CPD), finds a few reasons for having a small budget for the upcoming fiscal year.

First one is Bangladesh has been grappling with persistently low tax revenues. The tax-to-GDP ratio remains among the lowest globally, limiting government's fiscal capacity, she mentions.

Ms Khatun notes that as part of the $4.7-billion loan programme with the International Monetary Fund (IMF), Bangladesh is required to implement several fiscal reforms. These include reducing the budget size, enhancing tax collection, adopting market-based exchange rate, and narrowing budget deficit.

In the second place is the government aim to bring inflation down to about 6-7 per cent in FY 2025-26. To achieve the target, the government needs to implement cost-saving measures in public spending alongside pursuing a contractionary monetary policy, she notes.

"While the decision to downsize the national budget aligns with efforts to stabilise the economy and meeting international obligations, it poses challenges such as lowering public spending which could affect employment generation," says the CPD executive director.

She feels that it's a must-do for the government to mitigate the adverse effects. "It must prioritise efficient resource allocation, protect essential social programmes for the poor, and implement reforms to enhance revenue collection."​

 

[Saif]

FY26 budget: Govt to cut spending

The interim government is going to bring about major changes in the national budget by squeezing expenditure for the forthcoming financial year of 2025-26 because of resource crunches, said officials.

www.newagebd.net

FY26 budget: Govt to cut spending
Shakhawat Hossain 15 April, 2025, 23:15

The interim government is going to bring about major changes in the national budget by squeezing expenditure for the forthcoming financial year of 2025-26 because of resource crunches, said officials.

It may announce a downsized outlay of Tk 7.9 lakh crore to reduce dependency on borrowing to meet budget deficit.

Before ousting from power in the face of a mass uprising on August 5, 2024, the Awami League government had announced a Tk 7.97 lakh crore budget for FY25.

However, in March 2025, the interim government revised down the overall layout to Tk 7.4 lakh crore after a cut in the annual development programme by Tk 49,000 crore to Tk 2.16 lakh crore from initial Tk 2.65 lakh crore.

A trimmed ADP of Tk 2.3 lakh crore is likely to be taken for FY26, dropping unnecessary and politically motivated projects, said the officials, referring to the decisions made at an online meeting of the coordination council on macro-economy and resource management on Tuesday.

Education, health and social safety net programme are likely to be major thrust areas with a view to presenting a realistic budget, added the officials.

Presided over by finance adviser Salehuddin Ahmed, the meeting decided to keep the budget size as well as its deficit at a tolerable level.

Officials attending the meeting said the latest projections about the forthcoming national budget were varied significantly from the ones made in the previous coordination council meeting in December 2024.

The interim government had planned to announce an expansionary budget of Tk 8.48 lakh crore with a gross domestic product growth rate at 6 per cent.

But Tuesday’s meeting, which was attended, among others, by planning adviser Wahiduddin Mahmud and commerce adviser Sk Bashir Uddin, decided to project the GDP growth rate at 5.5 per cent, said the officials.

Inflation which has been hovering at 9 per cent is likely to be projected at 6.5 per cent, added the officials.

The officials observed that considering the overall high inflation in FY25, the next budget would not be expansionary in real term.

The ousted Awami League regime in its last budget of the 15-year rule aimed at achieving 6.75 per cent GDP growth and keeping inflation at 6 per cent.

Citing the 90-day pause on United States-imposed reciprocal tariffs, Tuesday’s meeting had a little discussion over the tariffs and their impacts on the country’s overall exports.

The finance adviser is expected to announce the national budget for FY26 on June 5 in a televised programme in the absence of a parliament.

He has already stated on a number of occasions that the new budget would be a realistic one, leaving footprints for an elected government to follow.​

 

[Saif]

Interim govt to announce budget 2 June

Breaking with tradition, the interim government has decided to announce the national budget on 2 June. This decision was made during a meeting of the Coordination Council on Financial, Monetary and Exchange Rate Affairs and the Asset Management Committee held at the Secretariat on Tuesday.

en.prothomalo.com

Interim govt to announce budget 2 June
Special Correspondent Dhaka
Published: 16 Apr 2025, 16: 15

Finance adviser Salehuddin Ahmed. File photo

Breaking with tradition, the interim government has decided to announce the national budget on 2 June.

This decision was made during a meeting of the Coordination Council on Financial, Monetary and Exchange Rate Affairs and the Asset Management Committee held at the Secretariat on Tuesday.

The meeting was chaired by the finance adviser, Salehuddin Ahmed, according to sources present at the meeting.

This will be the budget of the interim government led by Professor Muhammad Yunus.

Traditionally, the budget of Bangladesh is presented in parliament on a Thursday in June each fiscal year. But the budget for the 2025-26 fiscal year is scheduled to be announced on Monday.

It is anticipated that the proposed budget will amount to Tk 7.9 trillion (790,000 crore).

The budget will be announced before the Eid-ul-Azha holidays. The holidays are expected to start from the second week of June.

In keeping with tradition, the finance adviser will hold a post-budget press conference the following day, as confirmed by sources within the Ministry of Finance.

The original budget for the current (2024-25) fiscal year stood at Tk 7.97 trillion. Accordingly, the upcoming budget may be approximately BDT 70 billion (7,000 crore) lower than that of the current fiscal year.

As there is no national parliament, finance adviser Salehuddin Ahmed will present the upcoming budget via a televised broadcast.

The budget will be declared through a Presidential Ordinance.

In accordance with customary procedure, finance ministers of political governments present the budget in parliament; however, given the absence of a political administration, this will not take place this year.​

 

[Saif]

FY26 BUDGET: Task force’s advice, safety net, inflation in focus

The national budget for the 2025-26 financial year will accommodate major recommendations made by a task force on economy to tame inflation and expand the social safety net by bringing about major changes in the public spending and...

www.newagebd.net

FY26 BUDGET: Task force’s advice, safety net, inflation in focus
Shakhawat Hossain 24 April, 2025, 23:29

The national budget for the 2025-26 financial year will accommodate major recommendations made by a task force on economy to tame inflation and expand the social safety net by bringing about major changes in the public spending and resource mobilisation, said finance ministry officials.

The interim government formed the task force as part of its efforts to bring the country’s economy back on track after the autocratic Awami League regime, which was ousted in a mass uprising on August 5 past year, sent the economy into tailspin, they said.

The task force on January 30 submitted its report titled ‘Re-strategising the economy and mobilising resources for equitable and sustainable development’ with a host of recommendations on the national budget which suffered immensely due to corruption, inefficiency and wastage of resources during the Awami League regime.

The finance ministry officials said that directives had already been given to all ministries and divisions through a circular to follow the basic principles and task force’s recommendations to set up the projections on resource mobilisation and expenditure.

The other principles include poverty reduction, human resource development, mitigating the climate change, maximum uses of resources and keeping balance between the growth in gross domestic product and the overall budget outlay, they said.

Centre for Policy Dialogue executive director Fahmida Khatun termed the Finance Division’s moves positive against the backdrop of the shortage of resources because of a chronic revenue shortfall.

Things are moving towards right directions, said the CPD executive director, also a member of the task force, referring to recent reports that the interim government is likely to announce a downsized outlay of Tk 7.9 lakh crore for the FY26 to reduce dependency on borrowing to meet budget deficit.

The AL regime in its last budget had announced a Tk 7.97 lakh crore budget for FY25, but the interim government revised down it to Tk 7.4 lakh crore, slashing the annual development programme to Tk 2.16 lakh crore from initial Tk 2.65 lakh crore.

One of the major recommendations of the task force led by former Bangladesh Institute of Development Studies director general KAS Murshid was the maintaining of fiscal discipline.

‘The fiscal policy must be aligned with the monetary policy to manage expectations about inflation. If the government runs large fiscal deficits and borrows excessively, the situation can lead to higher inflation expectations, as people fear that an excessive money supply growth will drive up prices,’ according to the report by the task force.

Former World Bank Dhaka office chief economist Zahid Hussain termed the task force recommendation correct since the expansionary fiscal measures by the immediate past political regime made the contractionary monetary policy ineffective.

High inflation has become entrenched in recent years, he said.

The annual average inflation is expected to accelerate to 10.2 per cent in FY25, from 9.7 per cent in FY24 and 9 per cent in FY23, said the Asian Development Bank in its recent outlook regarding Bangladesh.

To offset inflationary pressure on majority of the people, the task force recommended prioritising poverty reduction-focused programmes such as old-age allowances, disability benefits, mother and child benefit schemes, and food security interventions targeting poor and vulnerable groups.

Terming the social protection allocations inflated because of the presence of pension for retired government employees and their families, savings certificate interest assistance and procurement of equipment for search, rescue operation and emergency communication for earthquake and other disasters among the list of 24 in the funds, the task force called for maintaining international standard to operate social security programme.

The Finance Division set side 2.5 per cent of the GDP and 17 per cent of the national budget on social protection spending in the national budget for FY25.

However, when the programmes under the list are excluded, the allocation drops to only 1.2 per cent of the GDP and 7 per cent of the budget, said the report.

The World Social Protection Report 2024–26, published by the International Labour Organisation estimated that Bangladesh spent just 0.9 per cent of its GDP on social protection, which is markedly below the South Asian regional average of 3.8 per cent as well as the averages of 4.2 per cent and 8.5 per cent for lower-middle-income and upper-middle-income countries respectively.

The task force focused on the annual development programme, saying that the policy priority for the government would be to set its size at a manageable level and seriously address the capacity constraints and inter-agency and aid coordination problems.

It also suggested the separation of tax policy and operational services of the National Board of Revenue, automation of the collection system of taxes and levies, abolishing zoning system and capacity building of the NBR among the resource mobilising steps.

The country’s tax revenue as a percentage of the GDP has been declining, hitting 8.6 per cent in 2022-23, the lowest in South Asia. The low tax-GDP base has been concerning as the resource shortfall prevented the successive governments from higher spending on important sectors like education, health and social safety net.

The introduction of bonds in the future has also been suggested by the task force to meet the financing with the country’s graduation from the least developed countries’ bloc in 2026.

Fahmida said that some of the recommendations should be implemented on the short-term basis while the others on the mid- and long-term basis.​

 

[Saif]

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]

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]

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]

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]

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.​

 

[Saif]

We must reduce deficit for sound budget management

Bangladesh experiences a deficit budget due to limited fiscal resources mobilisation.

www.thedailystar.net

We must reduce deficit for sound budget management

VISUAL: REHNUMA PROSHOON

Practically, in budget preparation of government accounts, three methods are commonly used: balanced, deficit and surplus budget. When government spending for a given fiscal year equals anticipated government revenue, the budget is considered balanced. This method is typically followed by economically sound countries such as Germany, South Korea, and Switzerland. The balanced budget is also referred to as a zero-based budget, where all expenses must be justified for each new period and are analysed for their needs and costs. On the other hand, a surplus budget occurs when government revenue exceeds expenditure. It is a rare occurrence. However, such budgets are occasionally observed in resource-rich countries such as Kuwait, Qatar, Oman, Denmark, Brunei and the UAE. But a budget deficit occurs when government expenses exceed revenue, and budget deficits affect the national debt and revenue collection by the tax authority. A budget deficit can lead to higher levels of borrowing, higher interest payments, and lower reinvestment, which will result in lower revenue during the following year. Economist John Maynard Keynes strongly favoured a deficit budget during the Great Depression of the 1930s. He argued and advocated for government intervention to curb unemployment and economic recession. He also debated that increased government spending was necessary to decrease unemployment, even if it meant a budget deficit.

Bangladesh, like many other developing countries, is experiencing a deficit budget due to limited fiscal resources mobilisation from internal sources. Besides, many industrialised countries also face similar long-term budgetary challenges and have run persistently large budget deficits in recent decades. These large and persistent budget deficits have generated considerable concern. There is a widespread perception that they reduce growth, and could lead to a crisis if they continue for long or become too large. Thus, it is important to examine the sources and effects of budget deficits.

Taking the last 30-years' total budget and deficit figures for Bangladesh from 1995 to 2024, a steady increase was found. The budget has grown from Tk 209.48 billion in 1995 to Tk 7,617.85 billion in 2024 (Budget data MoF). Similarly, the deficit also expanded significantly, from Tk 7.84 billion in 1995 to Tk 2,617.85 billion in 2024, indicating higher expenditure compared to revenue generation. It is also noticeable that, every five to eight years, the budget size more than doubled.

Bangladesh's budget has been experiencing a substantial deficit since the very beginning. The data between 1995 and 2024 also reflects this pattern on a year-to-year basis. Between 1995 and 2000, the largest deficit occurred in 1998 and the trend continued, with the deficit in 2024 marking a new peak.

When viewed from another perspective, the deficit as a percentage of the total budget from 1995 to 2024 highlights significant fluctuations, reflecting varying fiscal challenges over the years. The early years (1995-2000) show relatively lower deficits, the period from 2002 to 2010 exhibits moderate but volatile deficits, averaging around 30 percent, suggesting ongoing budgetary constraints. A gradual decline is observed from 2011 to 2019, with deficits stabilising below 30 percent. On the other hand, post-2020, the deficit accelerated again, peaking at 36.14 percent in 2023 before slightly decreasing in 2024.

Bangladesh's budget largely relied on deficit due to rising operating expenditures, import dependency, infrastructure development, and corruption-induced administrative inefficiencies. Consequently, the deficit-to-total-budget ratio remains high. However, despite this significant budgetary gap, the deficit-to-GDP ratio remains within the standard threshold of five percent. To offset this shortfall, the government borrows from both domestic and foreign sources. As a result, Bangladesh's vicious cycle of national debt has been accelerating year after year. Ironically, it is claimed that our deficit budget-to-GDP ratio remains within the standard level of five percent; however, there are concerns about the credibility of this figure due to possible exaggeration in GDP calculations (White Paper on Bangladesh Economy Report-2024). In reality, the actual deficit budget-to-GDP ratio is likely higher than the reported level.

Bangladesh should prudently shift towards a more balanced budget approach, incorporating zero-based budgeting to ensure maximum value from public funds. Furthermore, project selection, financing, and implementation must be administered with due diligence. Aside from operating expenses, capital expenditures under project financing should align with global cost competitiveness and incorporate appropriate technical expertise.

In 1925, US President Calvin Coolidge said, "I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the Government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar we prudently save means that their life will be so much the more abundant. Economy is idealism in its more practical form." We strongly believe our policymakers will act accordingly.

Md. Mehdi Hasan Khan is pursuing Certified Internal Auditing (CIA) programme at Institute of Internal Auditors.

Md. Kamrul Hasan is pursuing CIA programme at Institute of Internal Auditors.​

 

[Saif]

Interest payments, subsidies soak up almost half of budget

Interest payments and subsidies have absorbed nearly half of Bangladesh’s total budget expenditure in the first seven months of the current fiscal year, underscoring growing fiscal stress and raising concerns over public finances.

www.thedailystar.net

Interest payments, subsidies soak up almost half of budget
These two areas of spending accounted for Tk 118,046cr, dwarfing most other priorities in the July-January period

Interest payments and subsidies have absorbed nearly half of Bangladesh's total budget expenditure in the first seven months of the current fiscal year, underscoring growing fiscal stress and raising concerns over public finances.

Between July and January, total government expenditure stood at Tk 246,583 crore, with Tk 118,046 crore -- roughly 48 percent -- channelled into interest servicing and subsidy payments, according to a January report from the finance ministry.

"This problem is structural," said Professor Mustafizur Rahman, a distinguished fellow at the local think tank Centre for Policy Dialogue (CPD).

"The difficulties we're seeing now are the result of longstanding structural problems in our economy. We've accumulated a lot of debt, and now the cost of servicing that debt is rising," he said.

Interest payments alone rose 27 percent year-on-year to Tk 75,902 crore in the July-January period.

Although the 2024-25 budget earmarked Tk 113,500 crore for servicing domestic and foreign loans, finance officials now say the figure may need to be revised upward due to rising yields on treasury bills and bonds, higher foreign interest rates, and continued depreciation of the local currency taka.

"At times, we've had overcapitalisation, and because of that, we've had to incur even more debt," Rahman said. "That's why debt servicing costs are increasing now."

Rahman stressed the need for greater prudence in fresh borrowing. "But we can't escape the debt that's already accumulated -- we have to carry that burden. It will have to be managed by future generations," he said.

BALLOONING SUBSIDIES

Subsidies also surged 53 percent year-on-year, reaching Tk 42,144 crore in the first seven months of FY25.

For the full fiscal year, the government had allocated Tk 88,000 crore for subsidies, but that figure is also expected to overshoot initial projections.

In the power sector alone, subsidy allocations are likely to rise from Tk 40,000 crore to as much as Tk 62,000 crore in the revised estimate. Fertiliser and gas subsidies are also set to climb.

"In the case of subsidies, we've had persistent problems with inclusion and exclusion. There hasn't been any meaningful reform or restructuring," said Rahman.

"What we're seeing now in these high percentages is the direct result of that," he added.

Donor agencies have long urged Dhaka to rationalise subsidies, particularly in the electricity sector. But finance ministry officials say reductions have proven difficult due to mounting arrears and sector-specific liabilities.

"Looking ahead, we can act," said Rahman. "For subsidies, we can undertake reforms and restructuring, apply sunset clauses, and take steps to reduce them," said Rahman.

The pressure on the budget has been compounded by a sharp rise in public debt. In fiscal year 2023-24, government debt grew by 13.3 percent year-on-year to Tk 18.3 lakh crore, equivalent to 36.3 percent of the country's gross domestic product.

As a result, rising interest payments are steadily eroding the government's capacity to invest in other areas.

Despite the expanding size of the national budget, set at Tk 797,000 crore for the current fiscal year, revenue mobilisation has remained flat.

The resulting mismatch has left the government increasingly reliant on domestic and external borrowing to meet its obligations, deepening the strain on fiscal space.

PRESSURE ON BUDGET

Development spending is already under pressure. Spending under the Annual Development Programme (ADP) fell to Tk 48,701 crore in the July-January period, compared with Tk 52,488 crore a year earlier.

Development expenditure under the revenue budget also dropped to Tk 1,650 crore from Tk 2,016 crore.

Fiscal analysts say Bangladesh is entering a delicate phase where both expenditure composition and revenue mobilisation must be addressed simultaneously.

"We can't do anything about the past," Rahman said. "But going forward, unless we increase our revenue-to-GDP ratio, we'll fall deeper into this debt trap."

"We must also address the problems with inclusion, exclusion, and targeting through reforms and better implementation efficiency," he added.​

 

[Saif]

Special allocation in budget to uphold spirit of July uprising

The allocation was discussed during a high-level meeting on the budget at the state guest house Jamuna on Saturday, with the chief adviser in chair.

en.prothomalo.com

Special allocation in budget to uphold spirit of July uprising
Special Correspondent Dhaka
Updated: 18 May 2025, 09: 28

The upcoming national budget for the 2025–26 fiscal year will have a special allocation to uphold and implement the spirit of the July uprising. A dedicated fund will be created to support initiatives related to the uprising.

The allocation was discussed during a high-level meeting on the budget at the state guest house Jamuna on Saturday, with chief adviser Professor Muhammad Yunus in chair. There is a tradition to hold such a meeting before finalising the national budget.

Among others, finance adviser Salehuddin Ahmed, planning adviser Wahiduddin Mahmud, special assistant to the chief adviser (finance ministry) Anisuzzaman Chowdhury, finance secretary Md Khairuzzaman Mozumde, revenue board chairman Abdur Rahman Khan, economic relations division secretary Shahriar Quader Siddiqui, planning secretary Iqbal Abdullah Harun, and financial institutions division secretary Nazma Mobarek.

Finance adviser Salehuddin Ahmed is all set to announce the budget on 2 June. The proposed budget size is Tk 7.90 trillion, slightly lower than the current budget of Tk 7.97 trillion.

According to meeting sources, the chief adviser expressed satisfaction when the finance adviser presented the overall preparations regarding the budget.

The government has already announced the formation of a department dedicated to the July uprising, in addition to establishing a July uprising memorial museum. Those who sustained injuries during the uprising are being treated at home and abroad, and the treatment support will continue.

Audio-visual documents of the student-led uprising will be collected from local and international sources and preserved officially. The government has also a plan to introduce a loan scheme for the families of those martyred in the July uprising.

All these initiatives will be financed from the special fund. However, the exact amount of the allocation could not be known as of Saturday.​

 

[Saif]

Tax-free income ceiling to rise, tax exemption in capital market

The annual tax-free income threshold for individual taxpayers is likely to be increased in the upcoming 2025-26 fiscal year. Currently, the annual income limit, exempted from tax, is up to Tk 350,000, which might be raised by Tk 25,000. That means, the new ceiling for the tax-free income limit...

en.prothomalo.com

Budget 2025-26
Tax-free income ceiling to rise, tax exemption in capital market
Special Correspondent Dhaka
Published: 19 May 2025, 23: 01

NBR building File photo

The annual tax-free income threshold for individual taxpayers is likely to be increased in the upcoming 2025-26 fiscal year. Currently, the annual income limit, exempted from tax, is up to Tk 350,000, which might be raised by Tk 25,000.

That means, the new ceiling for the tax-free income limit would be Tk 375,000.

Chief Adviser Professor Muhammad Yunus held a meeting with officials from the Ministry of Finance and the National Board of Revenue (NBR) regarding the next fiscal year’s budget on Monday afternoon.

The meeting took place at Jamuna, the official residence of the Chief Adviser. NBR Chairman Abdur Rahman Khan and other senior officials were present there.

Proposed changes to duties and taxes in the budget were discussed during the meeting.

Sources from the meeting said, both regulatory conditions and tax incentives may be eased to encourage enlisting of new companies in the stock market.

Speaking regarding this, NBR chairman Abdur Rahman Khan told Prothom Alo, “The main focus of the upcoming budget is to simplify the tax payment process. Filing returns online will be further encouraged.”

He added that the next budget will be both tax-friendly and investment-friendly.

Meeting sources revealed that the government has agreed in principle to increase the tax-free income threshold and has directed the NBR to take necessary steps.

Discussions were also held on the minimum tax amounts for individuals and companies.

The meeting also discussed setting a flat minimum tax of Tk 5,000 for individual taxpayers, regardless of whether they live in city corporations, municipalities, or rural areas.

Currently, the minimum tax varies between T 3,000 and Tk 5,000 depending on location.

Currently, there are 11.1 million (1 crore and 11 lakhs) Taxpayer Identification Number (TIN) holders in the country, but only around 4 million (40 lakhs) submit tax returns annually.

According to NBR sources, today’s meeting emphasised expanding the tax base and simplifying the tax filing process.

Measures will be proposed in the budget to further expand online return filing, and companies may be required to file returns online mandatorily.

Furthermore, currently, businesses with an annual turnover of over Tk 30 million (3 crore) must pay a 0.6 per cent tax regardless of profit or loss. This rate might be increased to 1 per cent.

Apart from this, local production of refrigerators and air conditioners may face higher VAT (Value Added Tax).

Currently, a 7.5 per cent VAT is imposed at the production level for these items. This could be increased to 15 per cent. Additionally, the VAT rate for mobile phones might also increase based on their value addition.​

 

[Saif]

Addressing protectionism with grit in the FY2026 Budget

Our hope is that the forthcoming FY2026 Budget could be a crucial reform budget that could change the direction of the economy, like the budget of FY1992 did. Addressing the economy’s persistent and deep-rooted protectionism will have to be one of the key policy priorities in order to meet th

thefinancialexpress.com.bd

Addressing protectionism with grit in the FY2026 Budget
Zaidi Sattar

Published :
May 20, 2025 23:24
Updated :
May 20, 2025 23:24

Our hope is that the forthcoming FY2026 Budget could be a crucial reform budget that could change the direction of the economy, like the budget of FY1992 did. Addressing the economy’s persistent and deep-rooted protectionism will have to be one of the key policy priorities in order to meet the impending Least Developed Country (LDC) graduation challenges as well as for the immediate response to the onslaught of United States (US) ‘reciprocal tariffs’. These are times when global protectionism is on the rise. But the time is ripe for Bangladesh to do the opposite. Let me explain in as much detail as I can muster in this short article.

21st century protectionism is no ghost of bygone days. It has brought the global economy at a turning point. Geopolitical fragmentation, with increased protectionism, is replacing globalization trends. Various notions of “economic security” now take precedence over efficiency gains of international trade. Trade restrictions have been on the rise. World Trade Organization (WTO) records show that in 2023 such restrictions had risen to three times what they were in 2019.

Trade interventions are on the rise in the form of production subsidies, import restrictions based on national security, export controls to punish geopolitical rivals, and so on. The glossary of economic terms is being enriched by newly coined expressions like “homeland economics”, de-risking, re-shoring, friend-shoring, strategic autonomy, and the like. In essence, these are expressions to describe the emerging trend toward greater protectionism as more and more developed economies resort to “industrial policies” with various forms of competing support or subsidies for domestic production. This signals a departure from the rules-based trade order of the post-Bretton Woods era.

Finally, there is the US-China decoupling scenario gathering momentum by the day, recently intensified by the ubiquitous launch of “baseline and reciprocal tariffs” by the US on 02 April 2025 which, if implemented in whole or in part, could be the final nail in the coffin of the rules-based trade order of the past 80 years.The principal casualty, in my view,will be the “efficiency dividend” of globalisation and its pivotal offshoot – global value chain (GVC) integration. Trade multilateralism is under threat like never before since the creation of the post-War economic order. Thankfully, the US-China trade war is in a détente phase for some 90 days from 15 May. That gives the world economy only a brief reprieve.

IMPACT OF RISING PROTECTIONISM ON GLOBAL TRADE: While developing economies of the world made progress in dismantling protectionist trade policy instruments to reach an average tariff level of under 10 per cent, it is a sad testament of the times that in the recent past developed countries of the world have been gradually sleep-walking into the protection trap with a plethora of trade restrictions. The restrictions include such measures as higher tariffs, import bans, subsidies, and stricter customs procedures, with a notable focus on sectors like clean energy, semiconductors, and critical minerals. Together, all of these developments could present potential challenges to sustaining Bangladesh’s future growth trajectory.

Governments worldwide are revisiting tariffs, trade barriers, and industrial policies aimed at safeguarding domestic industries, citing reasons such as national security, economic self-sufficiency, and geopolitical tensions. This trend is a sharp departure from the globalization-driven liberal trade regime that had dominated global economic policy since the 1990s.

The impact of rising protectionism on global trade has been profound. First, global trade growth has decelerated. According to the World Trade Organization (WTO), global merchandise trade volume contracted in 2023, barely recovered in 2024, and is forecast to decline by 3 per cent if the novel scheme of US Reciprocal Tariffs get under way. The consequential trade fragmentation is expected to lead to inefficiencies, higher costs, and diminished gains from comparative advantage.

Second, global value chains (GVCs) are being restructured. Countries and firms are diversifying supply sources, investing in redundancy, and seeking trade resilience over efficiency. While this may create new trade routes and investment opportunities for some economies (e.g., Vietnam, Mexico, India, Bangladesh), it also disrupts established trading patterns and increases costs for consumers and producers alike.

Third, rising protectionism undermines multilateralism. The rules-based global trading system, anchored by the WTO, has weakened as more countries resort to unilateral or plurilateral trade actions. Dispute settlement mechanisms remain paralysed, and confidence in trade cooperation is waning, especially among developing economies.

For the world, such rising protectionism is reshaping the landscape of global trade by altering supply chains, dampening trade growth, and undermining multilateral norms. While some domestic sectors benefit in the short term, the longer-term costs include reduced global efficiency, higher prices, and a fragmentation of the global economy. Addressing these challenges will require renewed commitment to fair and inclusive trade cooperation amidst growing geopolitical and economic rivalries.

THE BANGLADESH SCENARIO: In the case of Bangladesh, we have come to live with the notion that protectionism is and will be a constant companion in our development journey. Though export industries and export production as a share of output is on the rise, significantly overtaking import-substituting production, the prevailing mindset is still one of protecting domestic industries as a national pursuit. As if, there is no cost to such a policy pursued ad infinitum. There is hardly any discussion of how high protection (tariffs) should be and how long it should prevail. What exists even violates the principal logic of protection – to be time-bound and declining over time.

A closer review of the state of industrial protection in Bangladesh as it stands today reveals that the ghosts of protection remain alive and kicking, imposing costs on the economy and consumers, in particular. It is the premise of this brief analysis that the burden of protection costs falls unevenly on the consumers in Bangladesh, through high tariff-induced prices of imported consumer goods and import substitutes domestically produced and sold.

This is not to say that zero protection is the answer. No. If the logic of protection is to be accepted, at least fourcriteria must hold: (a) protection must be accorded to nascent industries (so-called infant industries), (b) the level of protection must be reasonable, (c) protection must be time-bound and performance-based (ensuring output growth and job creation), and (d) protection must decline over time. Is our protection regime adhering anywhere close to these principles?

ACKNOWLEDGE THAT CONSUMERS ARE AT THE RECEIVING END: Evidently, when it comes to tariffs, the Bangladesh consumer seems to have had little voice in the past. Amidst a plethora of stakeholder consultations pre- and post-budget organized by the chamber representatives round the year, producers put forth various proposals for tariff adjustments, understandably, to raise their profitability which can happen if output tariffs are raised or input tariffs are cut. Producer groups, of whom there are many, lobby hard to get input tariffs (on intermediate, capital, and raw materials) reduced and output tariffs (on consumer goods) increased as much as possible.Seldom (or never) do we hear a word about reducing output tariffs!

To the extent that producers get their way – and it seems they do – the outcome is skewed in favour of producer interests and against consumer interests as protection remains high and consumers end up paying prices that are significantly above international prices.

The resulting high domestic prices are essentially a protection tax (inflationary) on consumers — an implicit transfer of resources from the pocket of the consumer to the pocket of the producer. But nobody, not even the Consumer Association of Bangladesh (CAB), has raised the issue of how long should consumers continue to be taxed to protect producers. This situation is quite unique for Bangladesh but any discussion is absent from the policy discourse.

For more reasons than one, this pre-budget time of the Interim Government is just the time to flag the interests of consumers in budget making. It is my understanding that the Government’s challenge is to strike a balance between the interests of the producer and the consumer, as well as promote the national interest which lies in laying the foundations for long-run efficiency, productivity and competitiveness of currently protected industrial activities and sectors.
Looking into the future, there is another important reason for rationalising the protection structure.

THE SURGING MIDDLE CLASS: With Bangladesh’s middle class surging in size and spending power consumer goods are in high demand – but at what price? In 2015, a leading international firm, Boston Consultancy Group (BCG), published a report entitled, “Bangladesh: The Surging Consumer Market Nobody Saw Coming.”

The report focused particularly on the middle and affluent class (MAC) in Bangladesh, defined as consumers earning more than $401 (approximately Tk 34,000) a month, or above $5,000 annually. This segment of consumers, estimated to be around 12 million strong, provided insights into the consumption trends of goods and services that went beyond basic necessities, and into the realm of convenience and luxury (discretionary spending).

Examples include air conditioners; flat-screen TVs; mobile phones and imported cosmetics. BCG projected the size of Bangladesh’s MAC population to rise to 34 million by 2025, when our gross domestic product (GDP) will have crossed $450 billion, and exceed US$1 trillion in the early 2030s.

According to anHong Kong and Shanghai Banking Corporation (HSBC) report, Bangladesh is expected to be the fastest-growing consumer market globally over the next decade, emerging as the ninth largest consumer market globally by 2030 – overtaking established markets such as the UK and Germany, and surpassing high growth peers Vietnam and Thailand. As consumers (affluent or middle class) rise in size so will be their economic and political clout.

But what are the prices they are paying now for consumer goods they buy? PRI research has shown that Bangladeshi consumers pay around 50 percent to 100 percent above world prices for most consumer products—either imported or produced locally. Is that fair in these times of high inflation?

RATIONALISING PROTECTION A NATIONAL IMPERATIVE: The strategy of import substitute protection for industrialisation comes at a high price in Bangladesh, paid by consumers who end up bearing the brunt of the protection tax. This could only make sense if it were a time-bound initiative. But theory and practice tells us that that is not how protection works. Once started it takes a life of its own, as is the case in Bangladesh and many other countries. Infant industry protection has a tendency to morph into permanent protection leading to the sustenance of “geriatric infants”.

Besides, the record shows that import substitution strategy has not given us jobs and growth. Export orientation has. RMG success is not a story of import substitution transiting into exports; it started off as an export industry. Not only is our economy stuck in the quagmire of high protection this policy is also characterised with anti-export bias which is preventing numerous non-RMG exports (some 1400-1500 products) from becoming significant export items, thus hampering product diversification of exports.

Amidst the ever-growing demand for consumption, rationalizing the protection regime which actually goes hand-in-hand with rationalization of the tariff structure has become a national imperative that can spur domestic spending, reduce anti-export bias of trade policy incentives, and fuelexport growth and diversification. The National Tariff Policy (NTP) 2023 – which has been lying dormant since its launch –could come to the rescue.

Bangladesh badly needed a nationally recognised policy articulating the structure and trend of import tariffs and protection. Now it has one in the NTP 2023 (Gazette notification of 10 August, 2023). NTP 2023 acknowledges that industrial protection is deeply rooted in Bangladesh’s economic policy and practice. Tariffs and para-tariffs are now the principal instrument of protection, which is the way to grant incentive to import substitute production. But the current practice does not require protection to be subject to any binding with regard to the degree of protection, the time period or any performance criteria. NTP proposes to bring some order in this chaotic state of protection by streamlining and rationalizing the protection structure.

As a national policy statement, NTP 2023 has not ignored the interests of the largest stakeholder group in the trade policy arena — consumers. One of its goals is to improve consumer welfare. Tariffs are ultimately paid by consumers. The protection that is afforded through nominal and effective (ERP) tariffs is also a tax on consumers who bear the ultimate burden of the protection tax by having to pay higher than world prices (tariff-inclusive price) for imported products and their domestic substitutes. So, policymakers need to balance the support they extend to producers by ameliorating the social costs of protection. The community as a whole stand to gain from protection only when the objective of protection is met, i.e. domestic import substitute producers become globally competitive in the shortest possible time so that protection can be removed and domestic prices of import substitutes converge to international prices. The longer this takes, higher are the social costs of protection. Therefore, one of the idealistic goals of NTP 2023 is to gradually scale back protective tariffs with the objective of reducing the burden of higher tariff-induced prices on consumers.

However, coherence and heighted coordination among the leading government agencies responsible for spearheading NTP 2023, such as Ministry of Finance, Ministry of Commerce, National Board of Revenue, Bangladesh Trade and Tariff Commission (BTTC),will be absolutely essential for giving traction to NTP 2023 implementation. For a trade analyst, the document reveals detailed diagnostics of the state of tariffs and para-tariffs applied for the purpose of protection and revenue. It could be the proper handle for starting a tariff and protection rationalization scheme in the FY2026 Budget. The Chief Adviser, who recently outlined the FIVE MUST DOs for speeding up preparation for LDC graduation, also listed NTP 2023 implementation as one of the top priorities.

So, with commitment from the top, including Finance and Commerce Advisers, and due diligence from the relevant policymakers in the Ministries of Commerce and Finance, such as NBR Chairman, Secretary MOC, and Chairman BTTC, economic and trade policy analysts in the country are eagerly looking forward to one of the most consequential rationalisation scheme for tariffs and protection reformin the forthcoming FY2026 Budget.
Lukewarm approach of the past governments to this critical reform imperative should be no guide for future direction expected to be laid out in the impending FY2026 Budget.

Dr. Zaidi Sattar is Chairman, Policy Research Institute of Bangladesh (PRI).​

 

[Saif]

FY26 budget with Tk 5,922cr for polls finalised

The finance ministry is expected to allocate a higher amount of fund, over Tk 5,000 crore, to the Election Commission in the 2025-26 financial year budget for the purpose of holding next national election and local government polls, ministry officials said.

www.newagebd.net

FY26 budget with Tk 5,922cr for polls finalised
Shakhawat Hossain 24 May, 2025, 23:53

The finance ministry is expected to allocate a higher amount of fund, over Tk 5,000 crore, to the Election Commission in the 2025-26 financial year budget for the purpose of holding next national election and local government polls, ministry officials said.

Including the projected allocation to the Election Commission, the FY26 budget outlay is expected to be Tk 7.9 lakh crore, they said.

Interim government’s chief adviser Muhammad Yunus in his address to the nation in December past year said that the national election would be held between December 2025 and June 2026.

The Election Commission has sought Tk 5,922 crore in allocation from the Finance Division under the finance ministry in the July 2025-June 2026 budget for conducting the next national election and local government polls.

Of the amount, Tk 2,794.55 crore has been sought for the national election while the rest for the local government elections.

EC secretary Akhtar Ahmed told New Age on May 21 that the Finance Division was positive regarding the allocation sought since it was connected to the much-talked-about general elections.

The Finance Division has always been generous in allocating fund to the Election Commission for holding national election, said the commission’s secretary.

Data from the finance ministry showed that the EC was given an allocation of Tk 1,230 crore in the outgoing financial year (2025-25).

The Finance Division allocated Tk 4,769 crore to the commission in FY24 featured by the January 7, 2024, flawed general elections boycotted by major political parties.

The finance ministry officials said that the budget for the forthcoming financial year, to be announced on June 2, would aim at stabilising the macro-economy and restoring fiscal discipline for obtaining about 5.5 per cent growth in the gross domestic product in the financial year.

This will be the first budget under the interim government that assumed power on August 8, 2024, after the ouster of authoritarian Awami League regime amid a mass uprising.

To achieve the fiscal goals, the interim government has decided to increase revenue generation and decrease reliance on borrowings from the internal sources mainly from the banking sector to check the crowding out effect.

The fiscal policy will supplement the current monetary policy to bring down the inflation rate to projected 6.5 per cent, said the officials involved with the budget-making process.

According to the Bangladesh Bureau of Statistics, the general inflation rate stood at 9.17 per cent in April 2025, gradually decreasing from 11.38 per cent hit in November 2024.

Economists, however, said that the overall budget financing would be challenging for the interim government as the revenue collection target was ‘ambitious’ against the backdrop of lack of capacity of the implementing agencies.

Former World Bank Dhaka Office lead economist Zahid Hussain said that they expected different budget for the forthcoming financial year from the interim government.

‘But the budget is likely to be same,’ he said, indicating the ‘highly ambitious’ planned revenue target.

The finance ministry officials said that the overall revenue generation target would be set at Tk 5.64 lakh crore with the National Board of Revenue’s collection target of Tk 4.99 lakh crore.

Till March of the outgoing financial year (FY25), the revenue board collected Tk 2.56 lakh crore in taxes against the target of Tk 3.22 lakh crore.

The less-than-projected revenue collection has been attributed to a slowdown in economic activities because of political uncertainty and inefficiencies of the tax officials.

Finance adviser Salehuddin Ahmed has recently said that the overall revenue generation would not be lower than the previous financial year (FY24).

Citing the 2 per cent growth in revenue generation until April (10 months of FY25), the finance adviser hoped that the reform programme initiated in the NBR would bolster the revenue mobilisation in FY26.

The NBR has been spilt into the Revenue Policy Division and the Revenue Management Division through an ordinance amid its failure to meet its revenue collection targets over the past fifty years.

The country’s tax-to-GDP ratio is about 7.4 per cent, one of the lowest in Asia, against the global average of 16.6 per cent.

Economists mentioned the uncertainty regarding private investments as another big challenge for the interim government for achieving the fiscal goals.

The government expenditure through development projects in the outgoing FY25 is not encouraging as only 41.31 per cent of the annual development programme was spent in 10 months, the lowest in a decade.

M Masrur Reaz, chairman of the Policy Exchange Bangladesh, said that a better implementation of the ADP would encourage the private sector to make more investments.

Increasing both public and private investments in real economy is still a big challenge, he said.

Economists said that the interim government needed extra efforts to improve the implementation rate of the ADP set at Tk 2,30,000 crore for FY26.

The new ADP is Tk 14,000 crore higher than the revised ADP of Tk 2,16,000 crore for FY25.

The finance ministry officials said that the implementation of the projected ADP that, according to them is a small one, would also help the Finance Division keep the budget deficit below 4 per cent of the gross domestic product.

The GDP size is likely to be projected at Tk 62,44,578 crore for FY26.

In FY25, the GDP size was projected at Tk 55,97,414 crore with 6.8 per cent growth (later revised down to 5.2 per cent) by the ousted AL regime in its last budget announced in June 2024.​

 

[Saif]

FY 26 budget to have no false assurances: Finance adviser

Salehuddin Ahmed identified controlling inflation and ensuring macroeconomic stability as the key challenges for the upcoming budget.

en.prothomalo.com

FY 26 budget to have no false assurances: Finance adviser
Staff Correspondent Dhaka
Published: 25 May 2025, 09: 02

Finance adviser Salehuddin Ahmed. File photo

Finance adviser Salehuddin Ahmed has said the upcoming budget cannot be described as ambitious as there will be no false assurances. Its size will be comparatively reduced, due to limitations in resources.

He came up with the statement while speaking to Prothom Alo during a special interview at his secretariat office on 21 May.

The adviser is scheduled to announce the budget for 2025-26 fiscal year on 2 June. In the interview, he talked about different issues, including macroeconomics, banking sector, capital market, and NBR.

When asked about the distinctive features of the budget, Salehuddin Ahmed said it cannot be termed as ambitious under any circumstances. There will be no unrealistic, unachievable, and false assurances. Due to resource limitations, the budget size would be reduced.

He, however, acknowledged the need for borrowing, saying the government would seek loans from both domestic and foreign sources, but limit borrowing from local sources. The budget deficit will be kept below 5 per cent of GDP.

The finance adviser identified controlling inflation and ensuring macroeconomic stability as the key challenges for the upcoming budget.

“It’s a big challenge to control inflation, and we have taken it. Also, there is an issue of maintaining macroeconomic stability – not just maintaining it, but making it sustainable. Another key challenge is reviving the private sector,” he said.

About undertaking mega projects despite a 7 per cent credit growth in the private sector and around 7 per cent tax-to-GDP ratio, the adviser said there will be no mega projects like metro rail and the Padma bridge.

“What you are describing as mega is not actually a mega project. For example, the Bay terminal project requires about USD 1 billion. It is not a big project like the metro rail or the Padma bridge,” he noted.​

 

[Saif]

Next budget to have realistic goals

Bangladesh switches focus from macro- onto micro-centric economic activity with budgetary focus on trade expansion, job creation and investment that benefits all. Finance Adviser Dr Salehuddin Ahmed, the custodian of the national exchequer under the post-uprising government, explained the af

thefinancialexpress.com.bd

Next budget to have realistic goals

Trade expansion, job creation, investment cardinal priorities to achieve ends, Finance Adviser Salehuddin Ahmed tells FE

Doulot Akter Mala
Published :
May 28, 2025 01:08
Updated :
May 28, 2025 01:08

Bangladesh switches focus from macro- onto micro-centric economic activity with budgetary focus on trade expansion, job creation and investment that benefits all.

Finance Adviser Dr Salehuddin Ahmed, the custodian of the national exchequer under the post-uprising government, explained the aforesaid vision, which guided him in authoring his maiden work, during an exclusive interview with The Financial Express on Sunday.

With the economy still bearing the pass-through effect of severe disruption due to immediate-past political upheaval and its aftereffects, the finance adviser walks a tightrope in making the two ends meet for resource constraints.

"Resource gap is the main challenge in budget formulation," says Mr Salehuddin, and unveils government plans on pooling foreign funds through budget-support credits apart from domestic resource mobilisation with taxes and bank and bond borrowings.

"Our needs surpass our current reserves. While we rely on domestic sources like bank and savings certificates, we must also secure foreign loans and assistance," he adds.

The economist-turned chief of the ministry of finance in the interregnum, following the August-5th changeover in 2024, says vision of this budget for 2025-26 fiscal is to build an equitable and prosperous Bangladesh where economic and business development benefits everyone.

"Our goal is to improve the quality of people's life and make daily living easier through practical and inclusive policy measures," he told the premier financial daily of Bangladesh.

"Unlike previous governments, we are not preparing a budget filled with unrealistic promises. Instead, we are focusing on achievable, clearly defined goals within the limits of our available resources. The emphasis is on realism, responsibility, and effectiveness," he says.

He stresses the need for better coordination of fiscal and monetary policies, efficient use of allocated funds rather than indiscriminate expansion,

Dr Ahmed acknowledges that cuts in the Annual Development Programme (ADP) may impact employment as the government is avoiding large capital-intensive megaprojects for development works.

"Instead, we aim to prioritize labour-intensive, small- to medium-scale local projects," he told the FE correspondents in response to a question.

A dedicated fund will be allocated to foster innovation and increase employment through entrepreneurship of the start-ups.

On health and education allocation, Dr Ahmed says the focus would be on skills and capacity development instead of structures and buildings.

He leaves a hint at widening the gap between capital market-listed and non-listed companies in the budget, downsizing export incentives in the upcoming budget.

On the ramped-up US tariffs, Dr Ahmed lists a slew of fiscal measures to offset the fallout. One is the government has knocked down the duty on cotton import to zero.

"We have lowered duty to zero in case of 100 products that are being imported from the USA. However, importing LNG from USA is very costly for us. We will increase regional trade," he says.

On external finances for bankrolling budget deficits, he says the IMF is giving budget support by June. Not only IMF, the World Bank and ADB are also giving support.

"What we will do, this time higher dependence will be on domestic resources."

The current government wants to lower tax expenditure that refers to many tax exemptions given through SROs or statutory regulatory orders beyond budgetary sanction.

"We will cut these exemptions. RMG sector is getting tax exemptions last 40 years claiming them infant industry," he says about an indicative cost-cutting measure.

"If the government doesn't increase FDI, remittance, export, we cannot lessen dependence on foreign sources for budget implementation," the finance adviser replied to a question in the end.

For the next fiscal year, the government, headed by Chief Adviser Prof Muhammad Yunus, has decided to present a Tk 7.90-trillion contractionary budget, slightly smaller than the current outlay of Tk 7.97 trillion.

This is for the first time in the country's history the government is making a national budget smaller than the previous one, taking into consideration the financing trend in the present context, according to officials concerned.

Some Tk 5.18 trillion has been targeted as revenue earnings in the next fiscal year while the Annual Development Programme (ADP) spending has been set at Tk 2.30 trillion.

The targeted gross domestic product (GDP) growth has been set at 5.5 per cent for the next fiscal year while the budget officials have set a target to bring down the rate of inflation to 6.5 per cent, from a steep rate hovering above 9.0 per cent presently.

Also, they have decided to keep the budget deficit at Tk 2.26 trillion or 3.62 per cent of the total outlay and the size of GDP in current prices for the next fiscal year has been estimated at Tk 62.5 trillion.​

 

[Saif]

How the FY2026 budget can make a difference amid challenges

The FY2026 budget must be more than a mere fiscal statement.

www.thedailystar.net

How the FY2026 budget can make a difference amid challenges

VISUAL: SALMAN SAKIB SHAHRYAR

The national budget for the 2025-26 fiscal year, set to be published on June 2, comes at a critical economic crossroads. It assumes crucial importance in steering the country towards a stable economic condition. Weak management and lack of governance during the previous government's time left the economy in a deep crisis, the burden of which is currently being shouldered by the interim government. The country has been facing formidable economic challenges, including persistent inflation, low revenue generation, low investment, low employment generation, high non-performing loans (NPLs) in banks, rising external debt-servicing obligations, and poor utilisation of public funds.

Against this backdrop, expectations from the FY2026 budget are high, which are further compounded by the repeated promise from the interim government to undertake reforms in order to establish a discrimination-free society. Understandably, the interim government is now expected to demonstrate this commitment through its budget formulation, which should not aim to chase ambitious growth targets, but should prioritise macroeconomic stability, inflation control, and welfare enhancement of the common people.

Reports suggest that the size of the upcoming budget will be Tk 7.9 lakh crore, which is 0.88 percent lower than the outgoing budget. Similarly, the Annual Development Programme (ADP) will be set at approximately Tk 2.3 lakh crore—13.2 percent less than the original allocation in FY2025. This downsizing underscores the government's objective to restore fiscal discipline and curb inflationary pressures. The budget aims to lower the fiscal deficit to around 3.6 percent of GDP—the lowest in more than a decade, signalling a serious attempt at prudent financial management. However, the challenge lies in ensuring that fiscal consolidation does not come at the cost of investments in critical sectors such as health, education, and social protection.

In Bangladesh, budget allocation for health remains underwhelming, with spending still below one percent of GDP, a figure that has stagnated for decades. Similarly, the allocation for education continues to fall short of the targets outlined in the Eighth Five-Year Plan, undermining efforts to build human capital. These shortcomings highlight a tension between fiscal austerity and the urgent need to invest in social sectors to build human capital and promote equity.

As before, the challenge for the interim government will be strengthening revenue mobilisation, which remains significantly low compared to the potential for higher collections. Amid low revenue collection for about a decade, the government aims to increase revenue collection in FY2026 by 7.6 percent compared to the revised target for FY2025, which seems unrealistic. It has to address this challenge not by raising tax rates but by expanding the tax base, enhancing compliance, and digitalising tax collection systems. Bringing high-income earners and the informal sector into the tax net is critical. The postponed restructuring of the National Board of Revenue (NBR) into two separate divisions—a move designed to improve tax administration but met with protests from officials—demonstrates the complexities of reforming revenue institutions. While political resistance has delayed this reform, it remains imperative that the interim government modernises tax administration, enforces compliance, and combats tax evasion.

Subsidy reform is another area demanding immediate attention. Blanket subsidies, particularly in energy and agriculture, contribute significantly to fiscal pressures and distort market signals. The budget has to phase out such subsidies and adopt targeted support to ensure that the vulnerable population are protected, while promoting efficient resource allocation.

Monetary policy will need to work in tandem with fiscal measures to stabilise the economy. The adoption of a market-driven exchange rate regime—a condition for IMF loan disbursement—has been a significant reform. However, it could lead to volatility of the currency market, which should be addressed through careful management. The Bangladesh Bank has adopted a contractionary monetary policy to control inflation, which has to be pursued for a few more months as the inflation rate is still high. However, the productive sectors should have access to sufficient liquidity support. Coordinated fiscal and monetary efforts are necessary to stabilise the exchange rate, manage external borrowing, and strengthen foreign exchange reserves. The balance of payment situation has improved due to higher exports and remittances in recent months. Efforts to increase formal remittance inflows and prudent foreign debt management will play crucial roles in maintaining BoP stability.

The other part of the budget is judicious public spending. With fiscal space constrained, the budget should not rely excessively on commercial borrowing from banks that could crowd out private investment and make borrowing expensive for the private sector. Concessional external financing should be pursued wherever possible. However, careful assessment of repayment capacity and project returns is required in this case. Efficiency in public spending is paramount. The government must focus on high-impact, socially beneficial projects while excluding politically motivated, low-return projects. The planning adviser mentioned that the ADP would be more realistic and efficient in FY2026.

The national budget is also expected to prioritise employment generation. Bangladesh faces rising youth unemployment and underemployment, compounded by structural challenges in the labour market. Therefore, the upcoming budget must also consider measures to bolster employment generation. It should prioritise labour-intensive sectors such as RMG, agriculture, ICT, and construction. Investment in skills development, digital literacy, and entrepreneurship support will be vital to prepare the workforce for meeting the market demands. Micro, small, and medium enterprises should be provided with support in areas such as access to finance, capacity-building, and market linkages.

The FY2026 budget should also clearly present a roadmap of economic measures in view of Bangladesh's graduation from the Least Developed Country (LDC) status in November 2026. The loss of duty-free, quota-free (DFQF) market access and concessional financing will necessitate proactive strategies to maintain export competitiveness and financial stability. The budget should support productivity enhancements, strengthen trade facilitation mechanisms, and invest in export diversification to reduce dependency on a narrow range of products and markets. Additionally, in view of the US reciprocal tariff and LDC graduation, the budget must rationalise tariff structures to align with global trade norms and enhance competitiveness. In the case of finance, Bangladesh should explore alternative sources of concessional financing, such as climate funds, green bonds, and public-private partnerships for sustainable infrastructure development.

While stabilisation and reform are essential, the budget must not lose sight of social equity. The interim government's proposed streamlining of social safety nets, reducing the number of schemes while increasing beneficiary coverage, reflects a move towards efficiency. However, allocations for social protection remain inadequate. The new budget must ensure that reforms translate into tangible benefits for the most vulnerable segments of society, supported by robust implementation and monitoring mechanisms.

The FY2026 budget must be more than a mere fiscal statement. While budgets are annual by design, they must reflect the country's long-term ambitions, grounded in its medium-term strategies like five-year plans and sectoral policies. By focusing on prudent fiscal management, targeted social protection, and strategic investment in infrastructure and human capital, policymakers can navigate Bangladesh's current economic challenges and foster economic opportunities for citizens.

Dr Fahmida Khatun is executive director at the Centre for Policy Dialogue (CPD).​

 

[Saif]

Speakers urge allocation of 3.0 pc of GDP for climate finance in 2025–26 Budget

Speakers on Wednesday at a seminar demanded that 3 per cent of Bangladesh's GDP be allocated for climate financing in the upcoming 2025–26 national budget. The event, titled “National Budget 2025–26: Climate Budget And Coastal Bangladesh”, was held at the CIRDAP Audito

thefinancialexpress.com.bd

Speakers urge allocation of 3.0 pc of GDP for climate finance in 2025–26 Budget

FE ONLINE REPORT
Published :
May 28, 2025 20:33
Updated :
May 28, 2025 20:33

Speakers on Wednesday at a seminar demanded that 3 per cent of Bangladesh's GDP be allocated for climate financing in the upcoming 2025–26 national budget.

The event, titled “National Budget 2025–26: Climate Budget And Coastal Bangladesh”, was held at the CIRDAP Auditorium in the city, organised by EquityBD in collaboration with COAST Foundation, CPRD, CDP, Waterkeepers Bangladesh, Sundarban Protection Movement, BCJF, Udayan, DUS, and SDI.

Chaired by disaster management expert Gawher Nayeem Wahra and moderated by COAST Foundation Executive Director Rezaul Karim Chowdhury, the keynote was presented by MA Hasan of the COAST Foundation.

Mr. Wahra said that the successful implementation of the Bangladesh Delta Plan hinges on resolving transboundary river issues.

He called for greater local involvement in embankment management.

Rezaul Karim Chowdhury argued for a minimum 3 per cent GDP allocation, advocating for climate-resilient infrastructure such as concrete embankments and clean water systems.

He emphasised the need for coordinated research to guide climate adaptation strategies.

AHM Hamidur Rahman Azad of Bangladesh Jamaat-e-Islami criticised the neglect of coastal communities in national development projects and called for better connectivity and livelihood programs for displaced populations.

Umama Fatema condemned environmentally harmful projects of the past, like the Rampal and Matarbari coal plants.

She stressed the disconnect between budget promises and actual implementation, urging stronger monitoring mechanisms.

The seminar concluded with a unified call for the government to prioritise climate-focused budget allocations, highlighting the urgent need to protect the lives and livelihoods of nearly 40 million people residing in Bangladesh's climate-vulnerable coastal regions.​

 

[Saif]

Enhancing the value for money is key

As the current fiscal year draws to a close in June 2025, the interim government is set to present the national budget for fiscal year (FY) 2025-26 on June 2, 2025. The underlying objective of the upcoming budget will be to bring stability to the economy, as Bangladesh currently faces multiple chal

thefinancialexpress.com.bd

Public expenditure management in FY26 budget

Enhancing the value for money is key

Fahmida Khatun, Mustafizur Rahman, Khondaker Golam Moazzem, Muntaseer Kamal and Syed Yusuf Saadat

Published :
May 29, 2025 00:55
Updated :
May 29, 2025 00:55

As the current fiscal year draws to a close in June 2025, the interim government is set to present the national budget for fiscal year (FY) 2025-26 on June 2, 2025. The underlying objective of the upcoming budget will be to bring stability to the economy, as Bangladesh currently faces multiple challenges. Public finance is strained by limited revenue growth, rising borrowing costs, and high operating expenditures. Persistent high inflation has eroded the purchasing power of low-income groups. The banking sector struggles with high non-performing loans and weak governance, needing structural reforms and regulatory oversight. The external sector shows recovery with strong remittances and exports, but risks persist from external debt and a market driven exchange rate. The capital market underperforms amid administrative delays and low investor confidence. The power and energy sector suffers from inefficiencies, inadequate infrastructure investment, and a lack of diversification of energy sources.

In this context, the Centre for Policy Dialogue (CPD) has prepared a comprehensive report under its flagship programme titled Independent Review of Bangladesh's Development (IRBD). The report presents an analysis of the economy during the current fiscal year based on the latest available data. The IRBD explores a few selected sectors, such as public finance, inflation, banking sector, external sector, capital market and power and energy sector. These areas reflect the core vulnerabilities currently confronting the country and are essential to address for achieving macroeconomic stability and sustainable growth. CPD offers a set of recommendations for each sector discussed in this reading of the IRBD. This article, based on the IRBD, focuses on public finance.

DATA LIMITATIONS: The issue of the timely availability of fiscal data continues to be a major constraining factor when it comes to the analysis of the public finance situation in Bangladesh. As of May 2025, data reported by the Ministry of Finance (MoF) is available only until January 2025. While alternative sources such as the National Board of Revenue (NBR), Implementation Monitoring and Evaluation Division (IMED), and Bangladesh Bank can be more timely, they lack the accuracy and congruency of the MoF data. Fragmented reporting is also an issue since no alternative sources provide a holistic picture of the fiscal scenario, such as the MoF. The present analyses utilise data from all the aforementioned entities but might be constricted in some instances owing to data limitations.

REVENUE MOBILISATION: As reported by the MoF, total revenue collection posted a 5.3 per cent growth during the July-January period of FY2025. This is a considerable decline from the corresponding figure of FY2024 (13.7 per cent). This implies that a whopping 64.6 per cent growth will be required during the remainder of FY2025 if the annual target for revenue mobilisation is to be achieved.

Without a doubt, this is a highly unlikely prospect. Indeed, in March 2025, CPD projected that the revenue shortfall could reach approximately Tk 1050 billion at the end of FY2025. The growth in revenue mobilisation during the July-January FY2025 period was primarily driven by a sharp increase in government earnings from interest as well as by enhanced collection of income tax.

According to the NBR data, tax collected by the NBR increased by a meagre 2.8 per cent during the July-March period of FY2025, whereas the corresponding figure of FY2024 was 10.7 per cent. The growth achieved so far in FY2025 can be attributed primarily to the enhanced collection of income tax. The slowdown in the implementation of the Annual Development Programme (ADP) as well as the downturn in overall economic activity have perhaps contributed to the poor collection of value added tax (VAT) and supplementary duty (SD) at the local level despite the high level of inflation and increased VAT and SD rates for nearly 90 items. Given the present context, whether the upcoming International Monetary Fund (IMF) conditionalities concerning revenue can be met remains a question.

The debacle concerning the abolishment of NBR has thankfully settled for the time being, thanks to the press release issued by the MoF on May 25, 2025. However, there is no doubt that repetition of such an instance will negatively impact the economy, particularly in the case of revenue mobilisation.

PUBLIC EXPENDITURE: As MoF data shows, overall utilisation of budget stood at 34.5 per cent during the July-January period of FY2025 (MoF, 2025). The corresponding figure for FY2024 was lower - at 32.4 per cent.

ADP implementation was also on the lower side - only 18.4 per cent financial progress was achieved during the first seven months of FY2025 (the corresponding figure for FY2024 was 20.0 per cent). Besides the political turmoil during July-August 2024, the interim government's cautious approach in terms of project approval and fund disbursement, and increased scrutiny of expenditure allocations may have contributed to the slow implementation of ADP. On the contrary, non-ADP expenditure showed an upward trajectory. During July-January of FY2025, utilisation of the non-ADP budget reached 42.5 per cent while the corresponding

figure for the previous fiscal year was 38.9 per cent. This implies that nearly an additional Tk 320 billion was required to conduct the non-ADP activities of the budget. Among the components of non-ADP expenditure, subsidies and current transfers were the major drivers of the uptick, accounting for nearly 61 per cent of the additional non-ADP expenditure. As the World Bank reported, this included increased incentive payments for remittances, food subsidies, and payments to clear arrears to the Bangladesh Power Development Board (BPDB).

Expenditure owing to domestic interest payment also increased substantially, with the corresponding share in additional non-ADP expenditure reaching 37.6 per cent.

The proposal to introduce a dearness allowance for government employees by replacing the existing 5 per cent special incentive from FY2026 comes at a curious time. As has been reported in the media, this move will entail an increase in public expenditure by nearly Tk 70 billion. While this allowance will provide some respite to the public servants during times of high prices of necessities, apprehensions remain as to whether this move will stoke inflation further. There are still concerns about how much attention the rest of the workforce-especially those working in low-paying private jobs and the informal sector-will receive. The timing and nature of this allowance also call into doubt the government's priorities. It needs to be observed whether this move was initiated to appease and maintain support from the government employees, particularly those in the bureaucracy.

The Ministry of Planning's IMED provides a more up-to-date picture concerning the ADP implementation scenario. According to IMED data, the ADP implementation rate against the original budget allocation reached 32.8 per cent during July-April of FY2025 - the lowest in the last ten years.

Within the components of ADP, utilisation of both 'Taka' (the part of ADP that is financed by domestic resources), and project aid reached their historical lows during the first ten months of FY2025. While the implementation rate of the former reached 31.1per cent, for the latter this rate was 35.6 per cent. The corresponding rates for FY2024 were 42.0 per cent and 51.6 per cent, respectively. As mentioned in the previous section, the slowdown in ADP implementation has adversely impacted revenue mobilisation and may have negative connotations for the achievement of a healthy economic growth.

Of the original ADP allocation for FY2025, the top ten ministries/divisions receiving the highest allocation account for 66.6 per cent of the total (the corresponding figure for FY2024 was 70.2 per cent). Among the ten, the ADP implementation of five was below the average level. These include the Road Transport and Highways Division, the Ministry of Railway, the Health Services Division, the Secondary and Higher Education Division, and the Ministry of Water Transport. As can be seen, the trend of poor ADP implementation in the education and health sectors has continued in FY2025. It is also a matter of concern that the average ADP implementation rate of government ministries/divisions which reside outside the top ten has almost halved-from 42.4 per cent during July-April FY2024 to 21.7 per cent during the corresponding period of FY2025.

DEFICIT AND ITS FINANCING: According to the MoF data, the budget deficit increased substantially during the July-January period of FY2025. Budget deficit (excluding grants) stood at Tk 383.93 billion at the end of January 2025. The corresponding figure for FY2024 was Tk 222.44 billion. This is perhaps attributable to the combination of marginal increase in revenue collection and substantial increases in non-ADP expenditure.

Government's net borrowing from foreign sources increased only marginally during the first seven months of FY2025. Although higher inflow of foreign finds was observed, this was offset by the higher amortisation of existing foreign loans.

Government net borrowing from the banking system stood at Tk. 407.86 billion (29.7 per cent of the budgetary target) during July-January of FY2025. On the other hand Tk 236.27 billion was borrowed from the banking system during the corresponding period of FY2024. This increase in bank borrowing by the government may have limited the availability of funds for the private sector. Government net borrowing from non-banking sources increased by Tk. 16.93 billion during July-January of FY2025. Within the non-banking sources, the net sale of National Savings Certificates (NSCs) experienced a sharp rise. During the July-January period of FY2025, the government sold NSCs worth (net) Tk 40.67 billion. On the contrary, the government repaid (net) Tk 73.10 billion to the people during the same period of the previous fiscal year. Overall, the dependency on domestic sources for financing the budget deficit increased during the first seven months of FY2025. Also, this dependency on high-interest rate domestic sources might have adverse implications for the debt servicing liabilities of the coming days.

THE PATH AHEAD: Based on the discussion so far, it becomes evident that the issue of limited fiscal space will persist in the foreseeable future. The extent of this will be determined by the capacity to mobilise additional revenue. To this end, finding newer avenues, enhancing the efficiency of existing efforts, and sealing leakages should all receive due importance. For instance, as part of finding newer avenues, initiatives such as taxing the growing digital economy and meaningful taxation of wealth and property can be considered. When it comes to enhancing the efficiency of existing efforts, analysing the current tax exemptions in-depth with thorough data analysis has become an urgency. As part of sealing the leakages, curbing illicit financial flows (IFF), limiting tax evasion, and tax avoidance should be high on the government's agenda. While efforts to mobilise additional revenue will be there, it needs to be taken into cognisance that some revenue losses will occur owing to the initiatives taken in view of Bangladesh's upcoming LDC graduation. Hence, a balancing game will need to be played. The latest rounds of discussions with the IMF have shown how difficult getting budget support can be. Receiving foreign financing through the channel of ADP is contingent upon the government's ability to design and implement projects. However, swift improvement in these areas will be a difficult proposition. In this backdrop, the onus of deficit financing is likely to fall onto bank borrowings. However, careful calibration will be required if private sector borrowings are not to be crowded out, given the commercial banks' liquidity situation and the government's decision not to borrow from the central bank.

The public expenditure framework will need to address the persistently high prices of necessities. It needs to be ensured that the low and limited income, vulnerable and disadvantaged groups are supported through both revenue and expenditure centric fiscal measures. In the area of ADP, the cautious approach in terms of project approval and fund disbursement, and increased scrutiny of expenditure allocations need to be continued. It needs to be ensured that the current austerity measures, be them part of prudent macroeconomic management or IMF conditionalities, have minimal impact on the social safety net, the health and education sectors, agriculture, and small and medium-sized enterprises (SMEs). The central focus of public expenditure management in the coming days needs to be the enhancement of value for money, given the limited fiscal space.

Dr Fahmida Khatun, Executive Director, Centre for Policy Dialogue (CPD); Professor Mustafizur Rahman, Distinguished Fellow, CPD; Dr Khondaker Golam Moazzem, Research Director, CPD; Mr Muntaseer Kamal and Mr Syed Yusuf Saadat, Research Fellows, CPD.

[Abu Saleh Md Shamim Alam Shibly and Tamim Ahmed, Senior Research Associates; Afrin Mahbub, Preetilata Khondaker Huq, Anindita Islam, Md Mehadi Hasan Shamim, Nuzaira Zareen, Ayesha Suhaima Rab, Safrina Kamal, Khaled Al Faruque, Md. Imran Nazir, and Tanbin Alam Chowdhury, Programme Associates; and Syeda Safia Zahid, Research Intern of CPD provide research assistance.]​

 

[Saif]

New budget commutes trade penalties, cuts essentials’ taxes

Multiple trade-facilitation measures like corporate-tax variables to promote capital market, commuting penalties for trade offences and cut-down tax rates for pharmaceuticals and other essentials are envisaged in the new budget. The current interim government is set to cut corporate tax fo

thefinancialexpress.com.bd

New budget commutes trade penalties, cuts essentials’ taxes
Fillip to trade, capital market expected from fiscal bounties

Doulot Akter Mala
Published :
May 29, 2025 00:37
Updated :
May 29, 2025 00:37

Multiple trade-facilitation measures like corporate-tax variables to promote capital market, commuting penalties for trade offences and cut-down tax rates for pharmaceuticals and other essentials are envisaged in the new budget.

The current interim government is set to cut corporate tax for publicly-listed companies on the capital market by 2.5 per cent in the upcoming budget, widening the much-demanded tax gap to 7.5 per cent between listed and non-listed companies.

Thus, the corporate-tax rate would be reduced to 20 per cent for listed companies while it would remain unchanged at 27.5 per cent for non-listed firms.

Currently, listed companies pay 22.5-percent taxes. The gap is currently 5.0 per cent.

This one of the budgetary measures, to be announced on June 2, is meant to encourage more companies to come on the capital market for securities listings for giving a much-needed fillip to the bourses.

Also, a set of trade-facilitation measures envisaged include a reduction in penalties for misdeclaration of imports and clerical mistakes in Import General Manifesto, and Import Policy Order. Tenure of calculating interest on demanded taxes pending with the courts would be reduced.

Currently, misdeclaration of imported goods is subject to payment of up to 400-percent penalty at customs point. The punitive payment might be commuted to200 per cent for the fiscal year 2025-26.

Silly clerical mistakes in IGM are currently subject to at least 50-percent penalty on payable duty taxes. The minimum benchmark would be abolished allowing importers to pay tax as per "gravity of their mistakes".

On cargo misdeclaration, the minimum ceiling of Tk 50,000 would be withdrawn.

Any contradiction in IPO is subject to severe penalty of minimum 100 per cent now. The minimum ceiling would also be done away with.

On pending court cases, accumulating rate of interest on the demanded tax is now calculated for ten retrospective years. It would be amended, making maximum two years on counting penalty. With this, any businesses that file court cases would pay interest on demanded tax, and after it is settled by the court, for two previous years instead of existing ten years.

On capital-market taxes, Dhaka Stock Exchange (DSE) Chairman Mominul Islam says the market needs at least 10-percent tax gap between listed and non-listed companies to enhance its depth.

"We have proposed the tax incentives to encourage more companies to come in the capital market," he adds.

Many have found significant increases in their tax liabilities after being listed on capital market as the companies have to maintain all compliances, he points out.

"Unless more companies come, the market would remain volatile as prices decline on some selective companies, affecting total indexes," says the premier bourse's chief.

Saiful Alam, President of the DSE Brokers Association of Bangladesh (DBA), hails the government move to widen the minimum spread, urging the government to increase it to 10 per cent.

The measure would attract more reputable and larger companies to enter the market, he says.

"Recently, we learned that the proposed spread will be 7.5 per cent, which is certainly a step in the right direction. However, we urge the government to reconsider our request and increase it to 10 per cent."

It is important to recognize that once a company is listed, it contributes to the treasury through both direct and indirect taxes, he adds.

"Therefore, we should strive to encourage more companies to go public," says the stockbrokers' association leader.

Meanwhile, the government is likely to expand the scope of import-duty exemptions for essential raw materials and products used in the manufacture of cancer-prevention drugs, as well as other medicines, in a bid to make treatments more accessible across the country.

In addition, plans are underway to reduce import duties on medical equipment to make healthcare services more affordable to all.

In this regard, the upcoming budget for FY 2025-26 is expected to include a total of 79 new products in the list of tax-exempt items under three existing SROs or Statutory Regulatory Orders.

According to sources at the Ministry of Finance, the budget proposal includes duty exemptions for 23 new raw materials used in cancer drug production, 36 raw materials for other pharmaceutical products, and 20 types of equipment used in the pharmaceutical sector.

Officials from the Ministry of Finance, speaking on condition of anonymity, said the initiative to include 23 new raw materials for cancer medicine production was taken based on recommendations from the Directorate General of Drug Administration.

According to the list, notable raw materials include Fostamatinib, Deucravacitinib, Peficitinib Hydrobromide, Povorcitinib, Ivarmacitinib, Rilzabrutinib, Momelotinib, Levoleucovorin, Ganciclovir, Tezepelumab, and Faricimab - all of which are used in the production of cancer- treatment medicines.

Furthermore, the ministry has proposed extending the 10% customs duty on the import of medical equipment and apparatus to all types of hospitals across the country. This move aims to improve healthcare services nationwide by making such benefits accessible to all private hospitals. Currently, only specialised or referral hospitals enjoy this fiscal facility.

The Ministry of Finance has also proposed introducing a dedicated HS code for the import of the Tangential Flow Filtration (TFF) System - a crucial device used in vaccine production - to allow it to be imported at a reduced 1.0-percent duty.

Talking to The Financial Express, A.M. Shamim, founder-Managing Director of Labaid Group, said, "If the government extends referral- hospital facilities to all hospitals, it will encourage further investment in the healthcare sector."

Monjurul Alam, CEO of Global Business Development at Becon Pharmaceuticals Ltd, adds: "We currently enjoy duty-free import of raw materials under the existing SRO benefits. If the government expands the list, it will help reduce the cost of medicine production."

Moreover, to keep inflation under control, the government plans to reduce the tax at source on commissions for supply of essential commodities. The current rate of 1% is expected to be halved to 0.50%, according to reliable sources.

The pared-down rate will apply to local LCs used for importing or supply of rice, wheat, potatoes, onions, garlic, peas, chickpeas, lentils, ginger, turmeric, dried chillies, pulses, maize, flour, salt, sugar, edible oils, black pepper, cinnamon, nuts, cloves, dates, cassia leaves, computers, computer accessories, and all kinds of fruits

Increased tax-free income limit: The government is likely to raise the income-tax threshold for individual taxpayers from Tk 3.5 lakh to Tk 3.75 lakh. However, the next slab will be extended to Tk 310,000 from the current Tk 100,000, bringing the total slab to Tk 685,000. Alongside this, the tax rate for this slab will be increased from 5% to 10%, according to sources in the Ministry of Finance.

Ministry sources further stated that the tax-free income limit will be Tk 425,000 for women, Tk 500,000 for persons with disabilities, and Tk 525,000 for gazetted freedom fighters.

Meanwhile, the tax slabs for the next levels of income will be adjusted as follows: the next Tk 400,000 of income will be taxed at 15%, the following Tk 500,000 at 20%, the next Tk 500,000 at 25%, and any remaining income will be taxed at 30%.

Relief for first-time taxpayers: There is some good news for first-time tax-return filers. The proposed budget is expected to introduce a provision in the Income Tax Act setting a minimum tax of Tk 1,000 for new taxpayers. This initiative is aimed at reducing the tax burden for new filers and easing tax-related anxieties.

However, the minimum tax for other taxpayers will be Tk 5,000.

The tax-free perquisites limit is also planned to be increased to Tk 2.0 million from the current Tk 1.0 million.

For private-sector employees, one-third of the total of their total income or Tk 4.5 lakh - whichever is lower - is currently exempt from tax. This exemption is proposed to be raised to Tk 5 lakh.

Talking to The Financial Express, Snehasish Barua, a chartered accountant and a director of SMAC Advisory Services Ltd, said: "Reducing TDS on essential goods is a good move, but the list of essential items needs to be far more extensive."

Increasing the perquisite limit is also a wise move, as it addresses a double-taxation issue already flagged by the High Court and helps businesses in reducing the unnecessary tax burden.

"However, eliminating the Tk 100,000 second tax slab could hit low-income earners hard, with some facing an additional Tk 2,500 in tax even with the higher basic threshold of Tk 375,000."​

 

[Saif]

Opting for realistic budget targets

As the countdown to the national budget announcement begins, expectations for a realistic and targeted approach from the interim government rather than ambitious, sweeping promises would not be misplaced. Such a pragmatic stance is necessary, given the diverse and pressing challenges confronting th

thefinancialexpress.com.bd

Opting for realistic budget targets

Published :
May 30, 2025 00:13
Updated :
May 30, 2025 00:13

As the countdown to the national budget announcement begins, expectations for a realistic and targeted approach from the interim government rather than ambitious, sweeping promises would not be misplaced. Such a pragmatic stance is necessary, given the diverse and pressing challenges confronting the economy at this critical juncture. Broadly, trade expansion, employment generation, and investment promotion are expected to feature prominently on the government's spending priority list --- an indication reinforced by Finance Adviser Dr. Salehuddin Ahmed in his recent interview with The Financial Express.

With the economy still reeling from the aftershocks of recent political unrest, Dr. Ahmed finds himself navigating a tight fiscal space. "Resource gap is the main challenge in budget formulation," he stated, emphasising the need for strategic resource mobilisation. The government, he revealed, plans to tap into foreign budget-support credits while also focusing on domestic avenues --- taxation, bank borrowing, and bond issuance --- to bridge the fiscal gap. Unlike previous administrations, the current government is intent on crafting a budget grounded in realism, focusing on clearly defined, attainable goals within available resources, he said.

Dr. Ahmed highlighted the importance of harmonising fiscal and monetary policies and ensuring judicious use of allocated funds, rather than expanding indiscriminately. In this context, the Annual Development Programme (ADP) will see reductions, which he admitted could affect employment. He, however, maintained that the government is consciously avoiding large, capital-intensive megaprojects and shifting its development strategy.

Media reports indicate that health and education --- two sectors chronically underfunded --- will again fall short of receiving meaningful increases. Despite expectations for corrective allocations from the interim government, no significant change appears likely. Dr. Ahmed's emphasis on skills and capacity development over infrastructure investments in these sectors may reflect a practical stance, but it fails to fully address the sectors' dire needs. It is critical that allocations are adequately matched to address glaring deficits in healthcare and education service delivery.

In a move aimed at fostering innovation and job creation, Dr. Ahmed mentioned that a dedicated fund will be introduced to support start-ups and new entrepreneurs. Furthermore, he hinted at widening the regulatory gap between listed and non-listed companies, and curtailing export incentives. The government is also looking to reduce tax expenditures by cutting back on exemptions granted through statutory regulatory orders (SROs) that often go beyond budget sanction.

The proposed budget outlay stands at Tk 7.90 trillion --- marginally lower than the current Tk 7.97 trillion. Revenue earnings have been targeted at Tk 5.18 trillion, with ADP spending set at Tk 2.30 trillion. The GDP growth target is 5.5 per cent, and inflation is expected to be brought down to 6.5 per cent from the current 9.0 per cent. The budget deficit is projected at Tk 2.26 trillion, or 3.62 per cent of GDP, which is estimated at Tk 62.5 trillion. Given the contractionary nature of this budget, it is imperative that sufficient attention is directed towards supporting small and medium enterprises, enhancing credit access for rural businesses, and bolstering sector-specific development, especially in agriculture, fisheries, and cottage industries.​

 

[Saif]

Finance adviser to unveil budget for FY 26 on Monday

Finance Adviser Dr. Salehuddin Ahmed will present the national budget for the fiscal year 2025-26 on, June 02 (Monday), according to a government hand out. This marks the first budget of the interim government that assumed power following the mass public uprising on August 05. The pre-recor

thefinancialexpress.com.bd

Finance adviser to unveil budget for FY 26 on Monday

FE ONLINE REPORT
Published :
May 29, 2025 16:20
Updated :
May 29, 2025 21:25

Finance Adviser Dr. Salehuddin Ahmed will present the national budget for the fiscal year 2025-26 on, June 02 (Monday), according to a government hand out.

This marks the first budget of the interim government that assumed power following the mass public uprising on August 05.

The pre-recorded budget speech will be aired at 4:00 PM on Bangladesh Television (BTV) and Bangladesh Betar.

To ensure wider reach, all private television channels and radio stations have been requested to broadcast the speech simultaneously by receiving the feed from BTV.

People familiar wit hthe development told the FE that that the size of the upcoming budget has been set at Tk 7.9 trillion—Tk 70 billion less than the budget for the previous fiscal year.

According to officials from the ministry of Finance and the Planning Commission, the contraction in expenditure aims to meet conditions set by the International Monetary Fund (IMF), reduce the number of non-essential projects, and contain the higher inflation persisting the economy for long.

With the Eid-ul-Azha public holidays scheduled from June 05 to 14, authorities have opted to announce the budget earlier, on June 02. Usually the budget is unveiled on Thursday and the post budget press conference on Friday.

As the National Parliament is not currently in place, the Finance Adviser will present the budget on television.

A presidential ordinance will subsequently be issued to formally enact the budget, in line with procedures applicable under the interim government.​

 

[Saif]

What the development philosophy should be for the FY2026 budget

The philosophical focus of the upcoming budget should be pro-poor and pro-people.

www.thedailystar.net

What the development philosophy should be for the FY2026 budget

VISUAL: ANWAR SOHEL

A national budget is commonly perceived as a numerical exercise. The normal questions are: what resources are available in total? How much would be mobilised from different sources? What would be the level of total expenditures? How much would be sectoral allocations? So, the budget looks like an accounting framework. Sometimes, a national budget is also referred to as a balance sheet of revenues and expenditures, between which a balance is maintained, as deemed desirable by the government.

But is a national budget a mere numerical exercise? Is it a simple accounting framework? Firstly, it's not. The allocations and expenditures in a national budget also reflect a government's economic priorities. What are the sources from which most of the revenues would be mobilised? Would they be mostly from direct taxes or indirect taxes, or from non-tax sources? Similarly, which sectors would get the major parts of budget expenditures—physical infrastructures like roads and bridges, or social infrastructures like health and education? Secondly, these priorities are not determined in a vacuum. They are guided by the government's vision, which is formed based on the development philosophy it holds.

The interim government of Bangladesh will present the proposed national budget for FY2025-26 on June 2. The budget is expected to provide a roadmap for the country's future development.

Over the past few months, there have been many discussions on the upcoming budget, the debates revolving around the budget size, probable sectoral allocations, resource constraints, priorities in the budget, and strategies to be followed, among other topics. The discussions mostly focused on the numerical aspects of the budget, as well as its priorities. Much of the analyses were around the new Annual Development Programme (ADP), which was approved recently.

The size of the FY2026 budget is set to be Tk 7.9 lakh crore, about Tk 7,000 crore less than the current fiscal year's original budget. Non-development expenditures are expected to be set at Tk 5.6 lakh crore, up by Tk 28,000 crore from the current budget's allocation. Debt servicing and ballooning subsidies would eat up a significant portion of the new budget. Interest payments are expected to amount to Tk 1.33 lakh crore, which will increase if principal payments are included. The government has allocated Tk 88,000 crore for subsidies. All these mounting costs have left little room for discretionary spending and have created fiscal strains.

As a result, the development expenditures in the FY2026 budget is set to be Tk 2.3 lakh crore, Tk 35,000 crore less than the original budget of FY2024-25. The development budget is the lowest in four years. Allocations to almost all sectors have been cut. About 70 percent of the budget will go to five sectors: transport and communication (25.64 percent), power and energy (14.08 percent), education (12.42 percent), housing and community facilities (9.9 percent), and health (7.89 percent). On the revenue side, the deficit in resource mobilisation may range from Tk 42,500 crore to Tk 54,000 crore.

Third, in terms of content, the objective of the upcoming budget has been stated to be restoration of economic discipline and economic stability. The budget will not be anchored in irresponsible and ad hoc policy actions and resource allocations. This would imply restoring transparency and accountability in public resource mobilisation and public expenditures. Some of the strategies of the budget will be reducing inflation, taking fewer foreign loans, prioritising ongoing projects and not undertaking new projects, and reducing additional costs and stopping corruption and inconsistencies in projects. The government has used a digital budget planning system to categorise budget spending, allowing for more transparent tracking of fund utilisation. This is important, given that Bangladesh performs poorly in budget transparency, ranking 37th among 125 countries in the 2023 Open Budget Survey.

In this context, the question arises: what development philosophy does the FY2025-26 budget uphold? Is it based on a pro-growth development philosophy or a pro-people development philosophy? Some observations are pertinent in this regard.

First, around 40 percent of the development expenditures are devoted to transport and communication and power and energy. These two sectors are critical for boosting production, and thus for enhancing economic growth. Related to this are the allocations to some megaprojects, i.e. the Bhola-Barishal 11-km-long bridge project at the cost of Tk 17,466 crore, the Bay Terminal Marine Infrastructure Development Project at the cost of Tk 13,525 crore, and Kalurghat rail-and-bridge project at the cost of Tk 1,156 crore. The implicit assumption behind these megaprojects may be that they would boost economic growth. Whether they do so or not, undertaking megaprojects basically indicates a leaning towards a pro-growth philosophy.

Second, issues like health and education are basic ingredients for enhancing human development. Yet, the health sector accounts for only about 7.89 percent of the development allocation, while education accounts for 12.42 percent of the development expenditure. Together, these two sectors account for over 20 percent of the development budget, which is lower than the allocation for transport and communication alone (25.64 percent). In fact, the transport and communication budget is double the education budget and triple the health budget. Furthermore, the development expenditure in the health sector has been cut by 13 percent compared to the outgoing budget, and education by nine percent. Efficient and effective implementation requires cuts in expenditures, no doubt, but those cuts cannot be indiscriminate across the board. If the development philosophy of the FY2025-26 budget were pro-people, the expenditures in the human development sectors would have been adequate and protected.

Third, as usual, agriculture has remained a neglected sector in the upcoming budget. The allocation of Tk 10,795 crore to agriculture represents less than five percent of the total development budget. In fact, compared to the outgoing budget, the agriculture allocation has been slashed significantly, by 18 percent. Given the importance of the agricultural sector in the country's economy and society, this can neither be termed as pro-poor nor be identified as pro-people. The same conclusion holds with regard to the allocations to the environment, climate change, and water resources. Together, they received Tk 10,641 crore, less than five percent of the development expenditures.

Given the nature and structure of Bangladesh's economy, its current economic realities, and the aspirations of its people, the philosophical focus of the FY2026 budget should be pro-poor and pro-people. Its preoccupation should not be economic growth alone; rather, it should be human development. Formulating and implementing an annual national budget with those goals can ensure both economic growth and human development in Bangladesh.

Selim Jahan is former director of the Human Development Report Office under the United Nations Development Programme (UNDP) and lead author of the Human Development Report.​

 

[Saif]

Budget must prepare us for difficult times

Low GDP growth demands political stability so as to boost investor confidence

www.thedailystar.net

Budget must prepare us for difficult times
Low GDP growth demands political stability so as to boost investor confidence

VISUAL: STAR

For quite some time, ordinary citizens have been feeling the brunt of economic hardship due to rising prices and other external shocks, including job losses. Therefore, the fact that the economy has experienced one of the slowest growth rates this fiscal year since FY1990-91, excluding the first year of the pandemic, does not come as a surprise. Bangladesh's GDP grew by 3.97 percent—almost half the inflated growth rate projected by the Awami League government when it prepared the budget last year. Although the interim government has revised the projection to five percent, the current provisional estimate is closer to what the World Bank and the Asian Development Bank (ADB) has forecast: 3.3 and 3.9 percent, respectively.

The decline has been attributed mainly to the sluggish performance of the agriculture and service sectors, which respectively saw growth rates of 1.79 percent and 4.51 percent in the current fiscal year, compared to 3.3 percent and 5.09 percent in FY2023-24. While the prolonged floods last year impacted agricultural output, the stubbornly high inflation dampened wholesale and retail sales in the service sector. But thanks to the RMG industry, the industrial sector performed well despite political tensions, labour unrest, and factory closures, with growth increasing from 3.51 percent in FY2023-24 to 4.34 percent this year.

However, the outlook for the coming fiscal year does not raise spirits either, as global disruptive factors, including the imposition of US tariffs and Bangladesh's graduation from LDC status, present added challenges. Domestically, slumped investment, especially in the private sector, has failed to create job opportunities. In fact, according to the Centre for Policy Dialogue (CPD), 2.1 million jobs were lost in the first half of the current fiscal year. More concerningly, women accounted for the majority of those who lost their jobs. International factors, such as severe cuts in donor-funded projects in the NGO sector, played a part in this crisis.

Unfortunately, the steps taken by the interim government over the last nine and a half months—including banking reforms, attempts to encourage investment, and the splitting of the National Board of Revenue—have not yet delivered any positive results. In fact, the banking sector is still reeling from the heavy burden of non-performing loans and irregularities incurred during the Awami League era. Under these circumstances, the upcoming budget must reflect the government's plan to tackle rising unemployment, high inflation, and illicit financial outflows. At the same time, the marginalised, including those at risk of falling below the poverty line, must be supported with well-designed and expanded social safety net programmes. Incentives should also be provided to sectors that can generate substantive employment, with a special focus on the female workforce.

At the same time, we agree with economists that the interim government should soon declare a definite roadmap for the election considering that it would provide businesses, among other stakeholders, with the predictability they require for planning investments and economic activities. Last but not least, the law and order situation must be improved to reignite investor confidence and reaccelerate the economic wheel.​

 

[Saif]

Finance Adviser to unveil FY26 budget on Jun 2

Finance Adviser Dr Salehuddin Ahmed will present the national budget for the fiscal year 2025-26 on June 02 (Monday), according to a government handout. This marks the first budget of the interim government that assumed power following the mass public uprising on August 05. The pre-recorded budge

thefinancialexpress.com.bd

Finance Adviser to unveil FY26 budget on Jun 2

FE REPORT
Published :
May 30, 2025 08:16
Updated :
May 30, 2025 08:16

Finance Adviser Dr Salehuddin Ahmed will present the national budget for the fiscal year 2025-26 on June 02 (Monday), according to a government handout.

This marks the first budget of the interim government that assumed power following the mass public uprising on August 05.

The pre-recorded budget speech will be aired at 4:00 PM on Bangladesh Television (BTV) and Bangladesh Betar.

To ensure wider reach, all private television channels and radio stations have been requested to broadcast the speech simultaneously by receiving the feed from BTV.

People familiar with the development told the FE that that the size of the upcoming budget has been set at Tk 7.9 trillion-Tk 70 billion less than the budget for the previous fiscal year.

According to officials from the Ministry of Finance and the Planning Commission, the contraction in expenditure aims to meet conditions set by the International Monetary Fund (IMF), reduce the number of non-essential projects, and contain the higher inflation persisting the economy for long.

With the Eid-ul-Azha public holidays scheduled from June 05 to 14, authorities have opted to announce the budget earlier, on June 02. Usually the budget is unveiled on Thursday and the post budget press conference on Friday.

As the National Parliament is not currently in place, the Finance Adviser will present the budget through electronic media.

A presidential ordinance will subsequently be issued to formally enact the budget, in line with procedures applicable under the interim government.​

 

[Saif]

Budget amid lower growth

For the third consecutive year, the country's economic growth rate has declined, reflecting the sluggish trend in the overall development scenario. The national statistical agency released the primary estimate of the Gross Domestic Product (GDP) for the current fiscal year (FY25) last week. I

thefinancialexpress.com.bd

Budget amid lower growth

Asjadul Kibria
Published :
May 31, 2025 23:55
Updated :
May 31, 2025 23:55

For the third consecutive year, the country's economic growth rate has declined, reflecting the sluggish trend in the overall development scenario. The national statistical agency released the primary estimate of the Gross Domestic Product (GDP) for the current fiscal year (FY25) last week. It showed that the GDP growth rate declined to 3.97 per cent in FY25 from 4.22 per cent in FY24. Earlier in FY23, the growth rate was 5.78 per cent, significantly lower than 7.10 per cent in FY22.

The latest decline in the growth rate is predictable and also realistic. Unlike the previous years when the now-ousted Hasina regime used to manipulate data to show inflated figures of economic growth, no such thing happened this time. The national statistical agency collects, calculates and releases the data of national accounts independently and professionally.

The provisional estimate of GDP growth of around 4 per cent is close to projections made by three international financial institutions. The World Bank projected that Bangladesh's economy would grow by 3.30 per cent in the current fiscal year. The International Monetary Fund (IMF) predicted a figure of 3.76 per cent, while the Asian Development Bank (ADB) mentioned 3.90 per cent. The Bangladesh Bank, the country's central bank, projected that the economic growth rate may hover at the 4.0 to 5.0 per cent range in FY25. Bangladesh Bank, in its half-yearly Monetary Policy Statement (MPS), released in January last, also cautioned that the growth outlook did not appear optimistic due to various challenges.

The latest estimate also showed that the agriculture growth rate declined sharply to 1.79 per cent in the current fiscal year from 3.30 per cent in the past fiscal year. The poor performance of farm activities had a significant impact on overall economic output. The services sector also experienced sluggish growth in the current fiscal year, recording a modest growth of 5.09 per cent from 5.37 per cent in FY24. The industrial sector, however, posted a modest rise in growth to 4.34 per cent in FY25 from 3.51 per cent last year.

One needs to keep in mind that the current fiscal year began amid heavy turbulence due to a student-led mass uprising against the oppressive rule of Sheikh Hasina. To supress the mass movement, the autocratic regime resorted to brutal killings, and at least 1,400 people sacrificed their lives. More than 20,000 people were injured, and many were intimidated by the brutal force of the Hasina regime. Nevertheless, the mass uprising finally compelled her to step down and flee on August 5 to take shelter in India. On August 8, an interim government took charge led by Nobel laureate Professor Muhammad Yunus. It took a couple of months to restore law and order and bring business back to normal, although economic activities, severely disrupted during July and August, have been struggling to recover fully.

The interim government has, however, initiated several reform measures to fix the various loopholes in the country's macroeconomic management. During the Hasina regime, poor governance led to an increase in bad loans, making the financial sector vulnerable and fuelling capital flight from the country. Data manipulation was also widespread to conceal the weaknesses of macroeconomic mismanagement, such as the sharp depletion of foreign exchange reserves. Fixing the problems within a short period is difficult, and the interim government has faced a daunting challenge in doing so.

Against this backdrop of sluggish economic growth and fractured economic management, finance adviser Dr Salehuddin Ahmed will present the national budget for the next fiscal year (FY26) tomorrow. It will be a televised placement as there is no parliament in the country. The finance adviser is likely to keep the budget outlay at Tk 7.0 trillion, which is 12 per cent less than the original outlay of the FY25 budget, which was Tk 7.97 trillion.

The core challenge for the finance adviser is to focus on containing inflationary pressure, creating environment for investment, and providing rooms for job creation. As the interim government is not obsessed with growth, it gives him some necessary space to manoeuvre the fiscal measures. The indication is already there that the adviser has decided to reduce duties and value-added taxes (VAT) on a good number of products and services. The minimum threshold of tax-free income will also be increased to adjust the real income with high inflation. With the continuation of the tight monetary stance to contain inflation, well-coordinated fiscal measures will ease the pressure of inflation in the near future.

The budget is faced with a pressing challenge-the urgent need to create sufficient jobs for the millions of people in the country. According to the International Labour Organization (ILO), Bangladesh has a labour force of 71 million, with a labour participation rate of 49.5 per cent. The youth unemployment rate is a staggering 16.8 per cent, and the share of youth not in employment, education or training is a concerning 30.9 per cent. The ILO's recent caution that youth unemployment in Bangladesh is expected to remain high further underscores the urgency of the situation. The finance adviser's plan for job creation, to be revealed tomorrow after the budget is presented, is eagerly awaited.

To create necessary jobs for millions of youths, the country needs more investment in the manufacturing and services sectors. The provisional estimate of BBS showed that the investment-GDP ratio declined to 29.38 per cent in the current fiscal year from 30.70 per cent last year. The alarming thing is that the ratio of private investment declined sharply to 22.48 per cent from 23.96 per cent during the period under review. This decline in private investment has a direct impact on job creation, as it hampers the growth of businesses and the expansion of job opportunities. The decline in investment is a reflection of lower business confidence, and the trend has been persisting for the last couple of years. The net inflow of annual foreign direct investment (FDI) also declined by 13 per cent last year, marking the third consecutive year of a decline in foreign investment. Therefore, the next budget needs to outline some visible measures to attract investment.

It's important to remember that budgetary measures alone are not enough to attract investment. A stable socio-political environment is equally crucial. Investors, particularly foreign investors, seek stability to ensure the sustainability of their investments in the medium and long term. While the interim government's efforts to improve the investment climate are commendable, the current situation has yet to provide a positive signal for long-term investment. If the dust takes longer to settle, the rise in investment will inevitably be delayed.​

 

[Saif]

Rollback of protective taxes begins under new budget

An envisaged rollback of protective taxes on 'made-in -Bangladesh' package of products begins in the upcoming fiscal year with the planned levying of standard 15-percent VAT on all goods after 2030. Local manufacturers of blender, juicer, rice cooker, oven, mobile-phone set, sanitary ware, m

thefinancialexpress.com.bd

Preparing for post-graduation free- trade regime
Rollback of protective taxes begins under new budget
Tax package for 'Made-in-Bangladesh' products to be phased out

Doulot Akter Mala
Published :
Jun 01, 2025 00:25
Updated :
Jun 01, 2025 00:25

An envisaged rollback of protective taxes on 'made-in -Bangladesh' package of products begins in the upcoming fiscal year with the planned levying of standard 15-percent VAT on all goods after 2030.

Local manufacturers of blender, juicer, rice cooker, oven, mobile-phone set, sanitary ware, motor vehicles, and three-wheelers may come under the fiscal plan.

Also, income tax for corporate taxpayers, irrespective of being in profit or loss, is poised to go up to 1.0 per cent from the existing 0.6 per cent.

The tax is known as 'unjust' one in the corporate world as losing concerns are compelled to pay the tax, known as 'turnover tax'.

The Finance Ordinance 2026 ratifying the new budget under the current interim government may come with these significant changes tomorrow (June 2, 2025).

Chairman of Policy Exchange Bangladesh Dr Masrur Reaz hails the move to phase out rather than sudden imposition of high taxes.

"I welcome the move that government has not slapped high tax overnight and is coming with a phase-out plan. It would give investors a comfort," he told The Financial Express.

However, he finds the minimum tax against the principle of direct taxation that must apply to income.

"It's a fundamental question whether such tax should exist or not. Increasing the tax looks like nailing the coffin that would hurt small businesses," he observes.

Tax officials say corporate income-tax benefit for 'Made in Bangladesh' would continue as per Statutory Regulatory Order, issued in 2021.

A senior official of the NBR says the tax-expenditure policy 2025, issued earlier, has capped tax benefit for maximum five consecutive tax years which the revenue authority has to follow from the forthcoming fiscal year.

"As VAT exemptions were given for the current FY, it is easier to phase out while it is difficult for income tax to impose such tax now as the tax waiver was offered for 10 to 20 years in 2021," he adds.

Under the plan, an industry enjoying the zero-rated VAT under the package would have to pay 5.0-percent tax for next two years followed by 7.5 per cent in FY2027-29 and 10 per cent for only FY2030 and 15 per cent from FY31.

However, some of the items, including essential items, rice, pulses, green vegetables etc, would continue to enjoy tax exemptions.

Manufacturers of high-end battery would get VAT waivers for next two years and pay 5.0 per cent for the remaining three years until 2030.

Any investors willing to establish hospitals would enjoy VAT exemptions on import of many items and waiver at local stage, the official says.

Also, sanitary napkin would enjoy VAT exemption until 2030 on both import of raw materials and local manufacturing stage.

"Investors would get a predictable VAT structure to plan their business-operation cost," the official says, detailing the new fiscal measures.

He notes that wide-spread allegations over lack of predictability in tax structure would be resolved with the step.

Currently, motor-cars, three- and four-wheelers, home and kitchen appliances and light -engineering products, some IT hardware are enjoying tax benefits under the made- in - Bangladesh campaign.

In 2021, tax exemption was given to automobiles for 20 years, to different home appliances for 10 years and to agro-products, light engineering and IT hardware for 10 years.

Officials have said the government has pressure from development partners to increase country's tax-to-GDP ratio mobilising more domestic resources.

As per International Monetary Fund (IMF) conditions, the revenue board will have to collect Tk 3.0 billion from policy measures and Tk 1.0 billion from administrative measures by the next fiscal year.

The tax-expenditure policy defines that only parliament would be empowered to offer any type of tax exemptions.

The policy has tightened tax-breaks by barring any agency or authority but the government revenue board from placing any tax-exemption issue before parliament.

The draft framework, obtained by the FE, is an integrated one comprising income tax, customs and value-added tax (VAT) wings.

For transfer of land, the purchasers would be able to enjoy a pared-down 15-per cent tax on capital gains for five corresponding years. Thereafter, the tax rate would be determined on the regular tax slab.

Despite upward revision of tax-free income ceiling, individual taxpayers in the first slab would have to pay higher taxes with the upward revision of tax rate to 10 per cent from 5.0 per cent.

Currently, individual taxpayers exceeding Tk 3.8 million in annual income would be required to pay 30-percent tax and the threshold would be lowered down to Tk 3.5 million.

Tax liberty is also planned to be squeezed in the run-up to Bangladesh's graduation from the LDC status, set for next year, after which the country would have to lose many trade benefits on the global market.​

 

[Saif]

Surprise unlikely in upcoming budget: Debapriya

Distinguished Fellow of the Centre for Policy Dialogue (CPD) Dr Debapriya Bhattacharya on Saturday said as there are no significant initiatives for recovering defaulted loans, bringing back laundered money, or expanding the tax net there’s no real surprise in the proposed budget. Recovering

thefinancialexpress.com.bd

Surprise unlikely in upcoming budget: Debapriya

Published :
May 31, 2025 16:33
Updated :
May 31, 2025 17:39

Distinguished Fellow of the Centre for Policy Dialogue (CPD) Dr Debapriya Bhattacharya on Saturday said as there are no significant initiatives for recovering defaulted loans, bringing back laundered money, or expanding the tax net there’s no real surprise in the proposed budget.

Recovering embezzled money, laundered funds and defaulted loans during the previous regime could serve as an innovative source of revenue in the upcoming national budget, he said, UNB reports.

He made the remark while speaking at a pre-budget shadow parliament session organised by Debate for Democracy at the Bangladesh Film Development Corporation (BFDC).

The upcoming budget seems to follow a conventional path with little scope for newness, he said.

Debapriya highlighted both the achievements and challenges of the current government’s economic management.

He said the government’s major success in recent times has been reducing the pressure of foreign debt by repaying $5 billion, which had been steadily increasing year after year under the previous government.

“The immediate past government left the country in a precarious situation with heavy foreign debt,” he said.

Debapriya praised the current government’s efforts in managing the external sector, including remittance inflows, export earnings, debt servicing, reserve accumulation, and exchange rate stability.

Criticising the existing development projects, he said that many are overvalued and nearly 40 percent of the expenditures are fictitious.

“The projects responsible for financial outflow in the past continue unabated,” he added.

Debapriya also stressed the need for proper management of revenue expenditure to build trust among taxpayers.

“Our tax system remains inequitable,” he said, adding that while some macroeconomic stability has been achieved in the external sector, private sector investment and domestic economic stability are still far from satisfactory.”

Debate for Democracy Chairman Hasan Ahmed Chowdhury Kiron presided over the session.​

 

[Saif]

Govt to unveil Tk 7.9t national budget on June 2 amid economic challenges

The interim government is set to unveil a Tk 7.9 trillion national budget for the 2025–26 fiscal year on June 2, a defining moment for Bangladesh as it navigates mounting economic pressures and charts a course for stability and growth. Finance Adviser Dr Salehuddin Ahmed will deliver the bud

thefinancialexpress.com.bd

Govt to unveil Tk 7.9t national budget on June 2 amid economic challenges

FE ONLINE DESK
Published :
May 31, 2025 14:05
Updated :
May 31, 2025 14:21

The interim government is set to unveil a Tk 7.9 trillion national budget for the 2025–26 fiscal year on June 2, a defining moment for Bangladesh as it navigates mounting economic pressures and charts a course for stability and growth.

Finance Adviser Dr Salehuddin Ahmed will deliver the budget speech in a pre-recorded broadcast scheduled for 4:00 pm on Bangladesh Television (BTV) and Bangladesh Betar.

Private television channels and radio stations have been requested to air the speech simultaneously, using BTV’s official feed.

This will be the first budget to be presented by the newly appointed administration, which faces the daunting task of curbing persistent inflation, reinvigorating private investment and strengthening social safety nets amid global and domestic uncertainties, as per a UNB report.

In contrast to previous years, the proposed budget is Tk 0.07 trillion lower than the current fiscal year’s allocation of Tk 7.97 trillion.

According to Finance Ministry officials, this reduction aligns with a strategy for fiscal consolidation, ensuring a more implementable and efficient financial plan.

The projected budget deficit stands at Tk 2.26 trillion, down from Tk 2.56 trillion in the current fiscal year, representing 3.62 per cent of the GDP.

To bridge this gap, the government will depend on foreign borrowing, bank loans, and savings certificates.

An ambitious GDP growth target of 5.5 per cent has been set for FY26, slightly higher than the revised 5.25 per cent for the current year. However, international financial institutions, including the World Bank, IMF and ADB, predict growth will remain below 5.0 per cent.

Inflation control remains a priority, with the government aiming to bring it down to 7.0 per cent. However, economists warn that persistent inflationary pressures could pose risks to achieving this target.

To alleviate the financial strain on lower-income groups, the budget includes an expansion of social safety net programs, increasing both beneficiary numbers and allowance amounts.

Key sectors prioritised for funding include agriculture, health, education and technology.

The Annual Development Programme (ADP) allocation is projected at Tk 2.3 trillion, a reduction from Tk 2.65 trillion in the current fiscal year, signifying a more focused investment approach.

Dr Salehuddin Ahmed has assured that the upcoming budget will be business-friendly, introducing tax policies designed to enhance investment, GDP growth and job creation.

The revenue collection target for FY26 is set at Tk 5.18 trillion, up from Tk 4.8 trillion in the current fiscal year. But, the IMF has recommended a more aggressive target of Tk 5.8 trillion under its reform agenda.

Non-development expenditures will rise, with major allocations earmarked for debt servicing, food subsidies, and banking sector reforms.

The non-development budget is expected to reach Tk 5.6 crore, an increase of Tk 0.28 trillion compared to the current fiscal year’s allocation.

The government also plans to strengthen the banking sector with a dedicated allocation to cover the capital shortfall of state-owned banks. Besides, subsidies for agriculture, fertilisers, and electricity will continue to support key industries.

As anticipation builds for the budget announcement, public sentiment is mixed—hopeful about stronger social safety nets and inflation control, yet wary of implementation challenges.

Economists caution that without structural reforms and effective execution, the budget’s ambitious goals may be difficult to achieve.

They advocate for enhanced wealth taxation and improved enforcement mechanisms to broaden direct taxation and minimise dependence on regressive indirect taxes.

The budget presentation by Finance Adviser Dr Salehuddin Ahmed will be closely scrutinised, as it is expected to shape Bangladesh’s economic recovery and growth in the post-uprising political transition era.​

 

[Saif]

Budget to have little reflection of reform recommendations

Experts said the lack of capacity for reforms and the absence of political will – both can be key reasons behind the situation.

en.prothomalo.com

Budget to have little reflection of reform recommendations
Fakhrul Islam Dhaka
Published: 31 May 2025, 16: 52

A representational image of budget for 2025-26 fiscal year.

The upcoming budget for the 2025-26 fiscal year will have no significant reflection of the reform recommendations made by the task force and committees related to economic affairs.

There will be no new economic roadmap either. Rather, the budget management will largely remain the same as in previous years, according to sources in the finance division of the finance ministry.

Experts said the lack of capacity for reforms and the absence of political will – both can be key reasons behind the situation. Therefore, another conventional budget is going to be announced under the leadership of finance adviser Salehuddin Ahmed. However, a notable difference is that the adviser is planning to deliver a shorter budget speech.

After the political changeover in August last year, a white paper formulation committee was formed under the leadership of Debapriya Bhattacharya, a distinguished fellow of the Centre for Policy Dialogue (CPD). Besides, the authorities formed a task force to redefine economic strategy, with former BIDS director general KAS Murshid as its chief.

The white paper committee submitted a 397-page report and the task force a 526-page report to chief adviser Professor Muhammad Yunus. Later, another committee was formed to reform the National Board of Revenue (NBR), and it managed to prepare an interim report only, instead of a comprehensive one.

Now, the finance division is not considering the recommendations while drafting the budget, leading to a concern over the future of economic reforms. The finance division officials said the budget will have instructions for implementation of some recommendations, while some proposals will be left for the next budget. The finance division believes that scopes for true reforms are limited unless there is an elected government.

What will happen to the white paper recommendations

The white paper committee recommended a two-year action plan, in addition to some short-term steps. Among the initiatives are to restore economic stability, prepare for FY 2026–27 alongside the upcoming year, determine reform priorities, formulate strategies for LDC graduation, accelerate progress toward SDGs, and initiate dialogue with development partners. But the upcoming budget will have no concrete steps to implement these recommendations.

In a speech on 16 December last year, chief adviser Professor Muhammad Yunus referred to the white paper report, saying the people were stunned by its findings. He noted that the public sensed economic damage under the previous fascist government, but the actual scenario was unknown until the report quantified it. The chief adviser also said the GDP growth rates shown in recent years were exaggerated and misleading.

Citing the chief adviser’s remarks, the white paper formation committee chief Debapriya Bhattacharya told Prothom Alo that the GDP growth figures from BBS were based on outdated data. “The chief adviser categorically stated that the figures were not accurate, but the upcoming budget is being drafted based on them. Here, I see a contradiction between the budget formulation and the chief adviser’s policy.”

The economist added that the finance adviser continued within the fascist framework. He revised the current budget, lowered revenue targets, and relied on indirect taxes for the next fiscal year, but refrained from clarifying the criteria of including or excluding priority projects.

Noting the parliamentary obligation to disclose quarterly updates, Debapriya also questioned why no quarterly economic statements were made, even though there is no parliament. “If it is not done, how will the people know if the government is doing good or bad?”

The task force recommended introducing a progressive tax system to increase taxes on the wealthy, boosting allocations for education and healthcare, and making services more accessible. It also proposed dividing Biman Bangladesh into two entities, and privatising one. The budget will have no initiative to implement this proposal.

The task force suggested nurturing around 1,500 export firms that earn over USD 1 million annually, but there will be no initiatives in this regard in the budget.

However, contractionary monetary policy is being maintained to control inflation as well as restore economic stability. The foreign currency reserve is now in relatively good shape, and its decline stopped before the new budget. Experts believe it remains a big challenge how these positive indicators can be used for real economic growth.

How will the economic strategy committee proposals be addressed?

KAS Murshid, the chief of the economic strategy redefining committee, said they expect some of their recommendations to be included in the upcoming budget, especially those over making AI and digital technologies more accessible in agriculture, industry, education, and healthcare.

He, however, remains doubtful about the fate of many significant proposals in the budget, including splitting Biman or supporting 1,500 exporters.

Future of NBR reforms

It is unknown how long the NBR reform committee may take to submit its report. Still, the government has already divided the NBR into two entities – policy department and implementation department – on the advice of the IMF. In the face of protest from the NBR officials, the government has now decided to amend the ordinance that divided the NBR.

When asked if there is anything new in the budget, a senior finance division official said, “Definitely. A special fund will be formed in the next budget to implement the recently promulgated Bank Resolution Ordinance.”

In this regard, finance adviser Salehuddin Ahmed told Prothom Alo over the phone last night, “It is not right that we have not taken recommendations from the white paper committee and the task force. We have taken into account their suggestions on money laundering prevention.”

He further said reality does not permit taking all the recommendations into account, and everything cannot be included in the budget. They have due respect to the significant recommendations, but those could not be considered due to practical constraints and limitations.​

 

[Saif]

Interim govt unveils its maiden Tk 7.9t budget today

Post-uprising interim government is set to present today its maiden national budget worth Tk 7.9 trillion for the fiscal year 2025-26, avowedly aligned with reforms and income parity. With no functioning parliament existing following the July-August changeover, the budget will be presented at 3.00

thefinancialexpress.com.bd

Interim govt unveils its maiden Tk 7.9t budget today
Aligned with reforms, intended income parity

FE REPORT
Published :
Jun 02, 2025 01:24
Updated :
Jun 02, 2025 01:24

Post-uprising interim government is set to present today its maiden national budget worth Tk 7.9 trillion for the fiscal year 2025-26, avowedly aligned with reforms and income parity.

With no functioning parliament existing following the July-August changeover, the budget will be presented at 3.00pm outside Jatiya Sangsad (national parliament) and broadcast simultaneously on state-run BTV and other private media outlets.

Finance Adviser of the interim government Dr Salehuddin Ahmed will roll out the budget through a pre-recorded speech.

For the first time since the independence of Bangladesh, the national budget is being contractionary compared to the previous years, as the current government walks a tightrope in the given situation marked by economic disruptions because of political unrest.

The last budget, presented under the Awami League government by former Finance Minister Abul Hasan Mahmud Ali, was Tk 7.97 trillion in size for the outgoing fiscal year 2024-25.

People familiar with the developments told the FE that the interim administration would prioritise restoration of macroeconomic stability, with a focus on curbing wayward inflation.

According to the Ministry of Finance, the upcoming budget will incorporate welfare initiatives to expand social-safety nets -- both by increasing the number of beneficiaries and the size of allowances -- and to create employment opportunities, particularly in rural areas.

Infrastructure development, especially road construction and renovation, will be stimulated to support this effort.

The Awami League government collapsed on August 05 following a student-mass uprising, leaving a vacuum filled with this interim government headed by Prof Yunus as Chief Adviser.

However, budget documents will be made available on the Finance Division's official website.

A similar budget presentation outside parliament also happened earlier under military or military-backed governments.

On June 09 of that 2009, the then Finance Adviser Dr AB Mirza Md. Azizul Islam unveiled a Tk 999.62-billion budget for FY2008-09.

That presentation also took place on a Monday and at 3:00pm and was broadcast via Bangladesh Television and Bangladesh Betar.

During the four consecutive terms of the Awami League, Abul Maal Abdul Muhith had presented the budget 10 times, AHM Mustafa Kamal five times, and Abul Hasan Mahmud Ali once -- spanning a total of 15 years and a half. All of those budgets were presented in parliament.

Later, the proposed budgets were discussed in the parliament for a month. The budget for the new fiscal year would have been passed by the parliament by the end of June. Since there is no parliament, there is no opportunity for discussion or debate on this budget.

However, after the budget is announced, the Ministry of Finance will seek opinions from citizens on the proposed budget, according to finance division officials.

They say there will be a menu on the finance division website to get public feedbacks on the budget.

It will be finalised based on the opinions. Thereafter, it will be approved by the Advisory Council in its meeting to be held under the chairmanship of Chief Adviser Prof Yunus any day after June 23, and will be implemented in the form of a presidential ordinance from July 01, 2025.

Saifur Rahman, the former Finance Minister of Bangladesh Nationalist Party (BNP) government, presented a total of 12 budgets during his three terms in office.

His ministerial tenure spanned December 1976 to October 2006. He served in three different governments and was the longest-serving Finance Minister of Bangladesh. He presented these 12 budgets between 1980-1981, 1991-1996, and 2001-2006.​

 

[Saif]

First budget under interim govt today

The national budget for the financial year 2025-26, with an overall outlay of about Tk 7.9 lakh crore, will be announced today amid expectations for prudent fiscal measures in line with the spirit of the July mass uprising that ousted the autocratic Awami League regime...

www.newagebd.net

First budget under interim govt today
Expectations run high amid multiple challenges
Staff Correspondent 01 June, 2025, 20:52

The national budget for the financial year 2025-26, with an overall outlay of about Tk 7.9 lakh crore, will be announced today amid expectations for prudent fiscal measures in line with the spirit of the July mass uprising that ousted the autocratic Awami League regime in the past year.

The total new budget outlay will be Tk 7,000 crore less than the original size of Tk 7.97 lakh crore announced in June 2024 for the outgoing financial year 2024-25. As the outgoing budget is expected to be revised at Tk 7.44 lakh, the new budget will be higher by Tk 46,000 crore.

Finance adviser Salehuddin Ahmed will announce the fiscal measures, aimed at collecting around Tk 5.6 lakh crore in revenue for FY2025-26, on the television and radio live from 3:00pm.

The national annual financial document has been titled as ‘budget for ending discriminations with special focus on the country’s graduation from the least developed countries’ block in the next year and easing the price hike of essentials and expansion of social safety net programme’, according to Finance Division officials.

The first budget under the interim government that assumed office on August 8, 2024 is coming against the backdrop of multiple challenges like inflation, unemployment, rising poverty, low revenue generation, and a slowdown in both public and private investment.

The political uncertainties over the next general elections, changing geo-politics, strained relations with neighbouring India, the Rohingya issue, and climate change will also be challenging for the finance adviser to implement the fiscal measures.Political party merchandise

Unlike the finance ministers in the past two financial years, the finance adviser will announce the fiscal targets in a much better macroeconomic situation marked by stability in exchange rate, upward forex reserves, high inflow of remittance, and almost a double-digit export growth.

Besides, the global commodity market is expected to remain favourable for import-dependent Bangladesh while the government has been struggling with the growing subsidy on food, fertiliser, and fuel oils over the past three years.

The World Bank meanwhile in its commodity market outlook released in April said that commodity prices were set to fall sharply in the current calendar year -- by about 12 per cent overall -- as weakening global economic growth weighs on demand.

Besides, commodity prices were projected to decline in the next calendar year -- by another 5 per cent -- hitting a six-year low.

The interim government has already decided to implement only economically viable projects under a smaller annual development programme, worth Tk 2.3 lakh crore, with main focuses on improving the implementation rate and quality of the projects.

A host of innovative measures have also been expected by the finance ministry officials to generate greater revenue and ensure an easy release of the remaining loan tranches under the current $4.7 billion International Monetary Fund loan programme that started in 2023 during the ousted AL regime to support the balance of payment.

The reliance on the other multilateral and bilateral lenders is expected to remain almost the same to meet the budget deficit that is likely to stay around 3.5 per cent of the gross domestic product.

Finance ministry officials said that they were expecting to receive Tk 1.5 lakh crore in loans from external sources while the rest Tk 1.21 lakh crore from domestic sources to make up the deficit.

Going for a smaller ADP in the context of resource shortage and lax capacity, the finance adviser is likely to find few clues to check the growing non-development budget, which will be around Tk 4.8 lakh crore this time.

The interest payment alone for the domestic and external borrowing will take almost one-fourth of the non-development budget.

Moreover, the interim government is considering providing dearness allowance to the public employees, for which some Tk 7,000 crore would be required in the new financial year.

On Sunday, the finance adviser told reporters at his secretariat office that he was expecting to announce an acceptable budget for all.

He also said that they would get more than two weeks for stocktaking on fiscal measures with the aid of newspapers, electronic media, businesses, chamber bodies, associations and academics.

Officials said that the finance bill is expected to be promulgated after it is approved by the advisory council in a meeting on June 22.​

 

[Saif]

A budget without illusions

No soaring GDP promises. No obsession with mega projects. No grand applause in parliament. This year, it’s just the finance adviser and his unemotional speech to be broadcast in the quiet hum of state television.

www.thedailystar.net

A budget without illusions
In a year stripped of spectacle, interim govt set to deliver an outlay shaped by restraint, realism and possibly, reform

No soaring GDP promises. No obsession with mega projects. No grand applause in parliament. This year, it's just the finance adviser and his unemotional speech to be broadcast in the quiet hum of state television.

Today, Salehuddin Ahmed will go on air at 3:00pm to deliver the first budget of the interim government -- and the first of his life. There will be no fanfare, but a nation listening in measured anticipation. It's the first realistic budget in years, if you like, precisely because it will offer a long-overdue fiscal detox.

As expected, Ahmed will speak plainly of endurance and hard choices. A nation long fed on big promises will possibly hear the "language of realism" -- something stripped of illusion. The budget will run a razor-thin 3.6 percent deficit, the leanest in more than a decade, marking a sharp departure from the looser fiscal stance of the past. It will be a day of reckoning about the controversial legacy left by the previous regime.

Ahmed will understandably seek to break with the past and, in a rare gesture of restraint, will trim the overall outlay by Tk 7,000 crore down to Tk 790,000 crore for the new fiscal year. It's not a dramatic cut, but a deliberate signal that the belts are being tightened.

A leaner budget doesn't have to ignore key areas, though. If it chooses, it can channel that power into public investments in education, healthcare and essential infrastructure for long-term prosperity. To spend or not to spend is not merely a fiscal choice; it is a political one. Yes, the government holds the power of the purse. Spending must not be shackled by arbitrary ceilings or a blind devotion to the dogma of "sound finance".

One critical area long left in the margins is unemployment. It deserves more attention from this government than ever before, as it aligns with Chief Adviser Muhammad Yunus's vision for zero unemployment. For decades, the economy has grown -- but without growing jobs. It has built roads, buildings, and bridges, yet left millions without meaningful work. A job-scarce economy took shape in the shadows of progress, quietly eroding dignity and hope. Now, that silence can no longer be ignored. It is time -- long past time -- to confront the scourge of unemployment as a central test of the country's economic vision. Growth that does not employ is growth that forgets its people.

"A growing disconnect between the skills imparted by our education system and the requirements of the private sector continues to limit employment opportunities," said Selim Raihan, a professor of economics at Dhaka University. "At the same time, a significant portion of the workforce remains trapped in the informal sector, where job security and benefits are minimal or absent," he added.

The budget arrives at a moment when the political skies are overcast. Optimism is being tempered by uncertainty, as political parties continue to seek clarity on the election timeline. Discontent has begun to ripple outward.

Protests broke out at the National Board of Revenue over an IMF-backed ordinance, disrupting operations in the final stretch before budget day. Demonstrations hit the Dhaka South City Corporation over control of the mayoral office. Another wave of protest swept through the secretariat over yet another ordinance. All of it -- almost simultaneously.

NO FANTASY

In his pre-recorded speech, Ahmed won't peddle GDP fantasies. No rosy projections -- at least not this year. The government's growth forecast, 5.5 percent, lags behind even the IMF's cautious estimate. There will be no more chasing growth at any cost, no more hollow boasts.

Last week, Bangladesh Bureau of Statistics released its provisional estimate, and it confirmed what many feared. The economy in the current fiscal year grew just 3.97 percent, the slowest pace since the pandemic year. The slowdown came from within: agriculture.

Still, there's a big number on the table: Bangladesh's GDP is expected to cross $500 billion in the new fiscal year. Many will greet the estimate with scepticism, but in a year defined by restraint, it remains a milestone worth acknowledging.

Behind these numbers is a deeper story: a country in the midst of an economic reset. For the first time in years, the budget is being shaped by economic necessity, not political whims.

But some economists have voiced concern that the interim government has yet to design a clear roadmap for economic recovery. In their view, the numbers may be sober, even honest, but without direction, they risk drifting. A budget, they argue, is more than an annual ledger. It can be a moment, perhaps the best moment, to set out a coherent strategy for rebuilding, reforming and reimagining the economy.

The metrics of judgment will shift this year. Will subsidies continue? Only for food and agricultural inputs. Will infrastructure spending surge? Not likely. The focus will shift to what the rural economy needs, not what cities want.

"The government would do well to prioritise investment in labour-intensive sectors such as agro-processing, light engineering and ICT. A robust employment strategy that supports SMEs, promotes entrepreneurship, and expands access to vocational and technical training could make a meaningful difference," Raihan said.

And taxes? Ahmed's message leaves little room for ambiguity. "I'm in the mood to end every exemption," he said at an event on May 18. The age of selective generosity may be drawing to a close.

This government will not be judged by promises, but by the progress it makes on reforms. And reforms are never gentle. In the banking sector, the central bank acted swiftly, stamping out the first flames before they could swell into a full-blown inferno. Holding reckless banks to account requires more than policy — it demands quiet resolve. In this, Bangladesh Bank passed its first true test.

Now, this administration will aim to ensure stability in the financial sector and reduce inflation. With that foundation, the forthcoming budget will prioritise social sectors to boost employment and inclusive growth.

Amid rising food prices and intensifying climate shocks, the government also plans to expand its social protection programmes and fund food security initiatives, including subsidised food for low-income households. At the same time, agricultural transformation remains a core focus. Continued subsidies for mechanisation, irrigation, and seeds are aimed at rebuilding rural resilience and supporting smallholder farmers.

Debt Roulette

Bangladesh still shoulders the financial burdens of the old regime. Officially, the aim is to lower the country's debt risk from moderate to low, as Ahmed indicated. It's not a small feat.

Yet here's the paradox: foreign borrowing will rise. Not for flashy megaprojects or political vanity, but to keep the lights on while cleaning up the mess. The higher foreign borrowing target reflects bills that can't be dodged. Energy sector gaps need plugging. The ghosts of overpriced infrastructure still haunt the balance sheet.

In a year of belt-tightening and caution, exports and remittances brought much-needed relief. Trade deficits narrowed. The current account, long in the red, showed signs of healing. Even the balance of payments, often a mirror of external vulnerability, began to tilt in the right direction. Foreign reserves hold steady at $20 billion, a sign of resilience.

But the story isn't without shadows.

Imports have recovered, but only just. Machinery imports, a barometer of investment appetite, have fallen. Letters of credit for capital goods have declined, signalling hesitation in the economy.

Globally, the winds are shifting. The trading landscape is growing more turbulent. President Donald Trump's reciprocal tariffs introduce fresh uncertainty. Closer to home, India's rising non-tariff barriers threaten to constrict trade routes.

For all this, Bangladesh's ability to negotiate -- at home and abroad -- will be tested as never before. As the country moves toward LDC graduation in November 2026, the government will come under growing pressure to navigate the complex web of bilateral and multilateral negotiations that lie ahead.

The new fiscal year stretches like a steep mountain trail -- narrow, uncertain and demanding careful steps. In this fresh beginning, caution is the only sure path forward.​

 

[Saif]

Balancing economic revival, inflation prime promise

Nearly 10 months after inheriting a faltering economy marked by institutional collapse, many near-empty banks, fastest-depleting forex reserves and inflation running high, the interim government on Monday unveiled its maiden budget prepared taking ground realities into cognizance. The interi

thefinancialexpress.com.bd

INTERIM GOVT PLACES TK7.9T MAIDEN BUDGET AMID CHALLENGES
Balancing economic revival, inflation prime promise

Unemployment, inflation, sluggish investment, revenue ruckus main pains in govt's neck

Jasim Uddin Haroon
Published :
Jun 03, 2025 01:10
Updated :
Jun 03, 2025 01:10

Nearly 10 months after inheriting a faltering economy marked by institutional collapse, many near-empty banks, fastest-depleting forex reserves and inflation running high, the interim government on Monday unveiled its maiden budget prepared taking ground realities into cognizance.

The interim administration has succeeded in calming some nerves of the economy and the administration. But the core afflictions remain: unemployment lingers at worrisome levels, inflation still high, private investment remains sluggish, and the revenue authority faces unrest that poses a threat for mobilising resources.

It is against these tense, and uncertain backdrops that Finance Adviser Dr Salehuddin Ahmed, wearing black blazer and white shirt, stood before the nation to roll out his maiden budget-a sober and restrained document crafted not in the heat of political ambitions.

There was no fanfare, no grand political chorus but with some breaks-only the finance adviser's calm, clinical voice, carried over the quiet airwaves of state-owned Bangladesh television and Bangladesh Betar, and a scattering of private channels.

Presenting the Tk 7.9 trillion worth of national budget for the forthcoming fiscal year 2025-26, Dr Ahmed admits that there are many risks still associated with attaining stability and reviving the economy back to its normalcy.

It comes out for him as an act of balancing economic revival and persistently high inflation in the first place.

Inflation-neutral pivot of the budget from traditional growth-centric budgeting, in the context of July changeover: The fiscal posture of the proposed budget appears to tread a cautious line-inflation-neutral at best-but much hinges on how taxation is structured and how the yawning deficit is financed.

While a deficit of Tk 2.26 trillion may not be alarming in isolation, any sharp upward trajectory could ignite inflationary pressure, especially if borrowing spirals out of control.

Curiously absent from the finance adviser's address was any reference to supply-chain bottlenecks or the grip of middlemen and cartels over the food-distribution system, both widely acknowledged as drivers of food inflation.

Instead, the custodian of exchequer in the interregnum attributes recent moderation in inflation-hovering above 9.0 per cent in May-to the twin deployment of contractionary monetary policy and a tighter fiscal stance.

He projects that inflation would ease further to around 8.0 per cent this June, citing stability in the exchange rate under a market-based regime and expectations of an uptick in imports.

The adviser also mentions fiscal measures such as subsidies to the agricultural sector, though these are long-established and offer little in the way of innovation.

Crowding-out concerns: But deeper in the budget lies a potential hazard. A significant share-55 per cent of the fiscal deficit-is projected to be financed from domestic sources, with over 83 per cent of that through the banking system. Though this amounts to just Tk 50 billion more than the target for the outgoing fiscal year, the implications seem profound.

Without tangible deposit growth to counterbalance the financing burden, the risk of a crowding-out effect in financing lurks.

Banks, drawn to the relative safety of government borrowing instruments, may divert resources away from the private sector, stifling entrepreneurship and productive investment.

Employment and investment--still on shaky ground: Bangladesh's economy is grappling with stubbornly high unemployment, and the budget's promises do little to assuage those concerns.

Both public and private investments are needed to jumpstart job creation and catalyze economic momentum.

While the budget attempts to send policy signals to spur private investment-including a commitment to favourable interest rates and a stable inflation outlook-the practical enablers appear limited.

One-stop service and NBR's single-window initiative, while laudable, remain insufficient in overcoming structural hurdles to doing business.

"We are committed to identifying the existing obstacles to investment and removing them as soon as possible," the finance adviser assures. But rhetoric must now meet reform.

Youth, startups, and entrepreneurial spirit: A silver lining in the budget is a renewed emphasis on entrepreneurship. There are modest but promising allocations aimed at fostering a new generation of business leaders.

Dr Ahmed proposes the creation of a Tk 1.0-billion fund for new entrepreneurs, complemented by another Tk 1.0-billion one for startups-a continuation from previous budgets. An additional Tk 1.0 billion is earmarked for a youth festival, intended to encourage engagement and innovation among the younger demographic.

Moreover, the proposed Annual Development Programme (ADP) worth Tk 2.3 trillion may offer some employment opportunities for the poor, though the extent of its impact is likely to be limited.

Without bold reforms to unblock private-sector investment, address structural inflation triggers, and inspire entrepreneurial dynamism, the economy may struggle to turn its cautious optimism into real, equitable progress.

Ambitious revenue target faces tough realities: a test of reform and resolve: The upcoming fiscal year's total resource-mobilisation target has been set at an eye-popping Tk 5.64 trillion, with the lion's share-Tk 4.99 trillion or 9.0 per cent of GDP-expected to come from the National Board of Revenue (NBR).

But this towering ambition raises eyebrows across the board, as the NBR has never before achieved a target of such magnitude.

This underscores an urgent need for deep-rooted reforms, not just cosmetic adjustments.

Yet the NBR itself remains embroiled in internal road protests, over creating two distinct wings. If this institutional uncertainty persists, it could seriously undermine revenue-collection efforts, dragging down the lofty aspirations set out in the budget.

Despite these tensions, Finance Adviser Dr Ahmed reaffirms the government's intention to pursue reforms at the NBR. He stresses the significance of direct taxation-a sustainable and equitable source of revenue that also plays a critical role in reducing income inequality.

Efforts to modernize tax administration are underway. Mandatory online-return filing for all individual taxpayers is in the pipeline for the coming year, with similar digital systems envisioned for corporate entities in the near future.

Tax policy adjustments: a balancing act: In a nod to inflation-weary citizens, the tax-free income ceiling for individuals has been raised to Tk 375,000 from Tk 350,000-a modest adjustment but a meaningful gesture toward relief amid rising living costs. However, to offset the revenue implications, the lowest tax slab has been hiked from 5.0 to 10 per cent.

In a bid to instill a broader culture of tax compliance, a minimum tax of Tk 1,000 has been introduced for first-time taxpayers-an approach that may build discipline from the ground up.

Reforms beyond revenue: cleaning the institutional slate: The finance adviser acknowledges the necessity of sweeping structural changes, referencing 11 proposed reform commissions covering anti-corruption efforts, judicial independence, land-law modernization, and election commission reforms. These, he argues, are essential to restoring faith in public institutions.

In one of his most pointed remarks, Dr Ahmed laments the collapse of financial governance over the past 15 years, saying, "Millions of taka has been siphoned off from banks."

He decries the culture of "hide-and-seek" around non-performing loans (NPLs), suggesting past administrations obfuscated the true scale of the banking sector's malaise.

Social safety nets: missing efficiency: While the adviser underscores plans to increase both the number of beneficiaries and per-capita allocations under social-safety-net programme, he remains notably silent on efficiency reforms.

Past programmes have often suffered from poor targeting and political manipulation, allegedly dominated by cadres of the ousted Awami League government. No clear blueprint was offered for plugging leakages or improving targeting mechanisms.

Relief for the commoners: Still, the budget does offer some relief for the middle class and consumers. The threshold for excise duty on bank balances has been raised to Tk 300,000 from Tk 100,000-a move expected to reduce the burden on savers.

Moreover, several VAT exemptions have been announced-on LNG, packaged liquid milk, sanitary-napkin production, ballpoint pens, and computer monitors up to 30 inches-all of which may help ease cost pressures on households and small businesses.

Restoring investor confidence and governance: Efforts to revive capital- market participation have also been woven into the budget. The corporate-tax differential between listed and non-listed firms has been widened by 7.5-percentage points, a signal meant to lure local and multinational firms into the capital market.

The source tax on brokerage transactions has been cut to 0.03 per cent from 0.05 per cent.

But these incentives come at a precarious time-many listed companies are trading below their face value, and a large number have failed to declare dividends for years. The reforms must, therefore, be matched by stronger oversight and accountability in market operations.

A budget framed by upheaval: This is, in many ways, an acid test for the finance adviser, who assumed office in the wake of the July Mass Uprising. Rather than chasing high growth figures, the current administration is opting to rebuild the foundational scaffolding of the economy-an approach long overdue.

"Our core objective," Dr Ahmed concludes, "will be to ensure a better quality of life for all, and to build a system free of discrimination at all levels."​

 

[Saif]

FY26 GDP growth target set at 5.5pc

The interim government has backtracked from the previous administration's ambitious macro-economic targets as it is expecting 5.50 per cent economic growth in the next fiscal year. It has also revised down the current fiscal year's gross domestic product (GDP) growth target to 5.0 per cent f

thefinancialexpress.com.bd

FY26 GDP growth target set at 5.5pc

FE REPORT
Published :
Jun 03, 2025 01:14
Updated :
Jun 03, 2025 01:14

The interim government has backtracked from the previous administration's ambitious macro-economic targets as it is expecting 5.50 per cent economic growth in the next fiscal year.

It has also revised down the current fiscal year's gross domestic product (GDP) growth target to 5.0 per cent from the earlier 6.75 per cent.

The ousted Sheikh Hasina government took an ambitious 6.75 per cent economic growth target for FY25 despite the internal and external headwinds in the macro-economy.

The interim government has also set a realistic target of 6.0 per cent GDP growth in the medium term for FY27.

Finance Adviser Dr Salehuddin Ahmed in his FY26 national budget speech on Monday said the GDP growth rate may be slightly lower due to the fight against inflation.

"According to provisional estimates, GDP growth in FY25 could be 3.97 per cent. However, we expect the final estimate to be higher. We also expect that the growth rate will rise to 6.5 per cent in the medium term in FY28," he added.

Meanwhile, Bangladesh's economy has been estimated to grow at 3.97 per cent in the outgoing FY25 against the revised target of 5.0 per cent, the latest provisional data from the Bangladesh Bureau of Statistics (BBS) showed.

According to the 2023 GDP estimation, Bangladesh is the 33rd largest economy in the world.

The FY26 budget has been formulated with a view to accelerating economic growth in order to prepare for graduation from the least developed country (LDC) status, thus reaching the upper-middle income category by creating new jobs, sustaining GDP growth, promoting local industries, increasing investment through protection and trade facilitation, developing export-oriented and heavy industrial enterprises, and promoting the Made in Bangladesh concept.

According to provisional estimations, Bangladesh's GDP size is Tk 55.527 trillion or $462 billion in the current fiscal year.

The government in its medium-term macroeconomic framework says the GDP is expected to reach $487 billion in FY26 with 5.50 per cent expansion.

Meanwhile, the estimated GDP growth has been marked as the lowest in several years, raising concerns among economists and policymakers.

The BBS provisional data revealed modest growth across key sectors - agriculture by 1.79 per cent, industry 4.34 per cent, and services 4.51 per cent in FY25.

While these figures reflect some activities, they fall far short of the government's initial ambitious target of 6.75 per cent and even the revised target of 5.25 per cent GDP growth for the current fiscal year.

This downward revision aligns with earlier projections from international bodies. The International Monetary Fund (IMF) had adjusted its forecast to 3.76 per cent for FY25, the Asian Development Bank (ADB) 3.9 per cent, and the World Bank (WB) 3.3 per cent.

Although the GDP expanded at a slower rate, per capita income rose to $2,820 in FY25 from $2,738 in the previous fiscal year, the provisional data shows.​

 

[Saif]

Will the budget offer a release from two sufferings?

Bangladesh is facing multidimensional crises. According to World Bank, poverty rates will rise from 20.5 per cent in 2024 to 22.9 per cent in 2025

en.prothomalo.com

Will the budget offer a release from two sufferings?

Rashed Al Mahmud Titumir
Updated: 02 Jun 2025, 16: 04

Two crucial questions demand urgent attention in the upcoming budget of the 2025-26 financial year: how to increase domestic resource mobilisation, and how to ensure financing to tackle post-COVID poverty and harm done to income. These questions are not merely financial matters. There are tales of historical sufferings. They continue to haunt the development cycle. The third concern was discussed in an earlier column: “Is the budget a strategy to reduce the debt burden?”

The first suffering was about the looting of resources by the British colonialists. The economist Dadabhai Naoroji had calculated that towards the end of the 19th century, around 30 million to 50 million pounds were extracted out of India every year.

During the devastating famine of 1943, when hundreds of thousands perished in Bengal, the region still functioned as a revenue-generating engine for the empire. Bengal contributed 10 to 15 per cent of British India’s total tax revenue. It is most unfortunate that even as a post-colonial state, Bangladesh’s tax-to-GDP ratio stands at only 7.4 per cent. The South Asian average is 10 to 12 per cent, already well below the global average for developing countries. This is a tragic irony: the region once exploited for its revenue is now itself struggling to mobilise domestic resources.

The second suffering is about Lord Beveridge. He was the architect of the United Kingdom’s post–World War II social welfare system. Yet his birthplace, Rangpur, remains one of the poorest regions to this day. According to the Bangladesh Bureau of Statistics, the poverty rate in Rangpur stands at 24.8 per cent, that is, 6.1 percentage points higher than the national average of 18.7 per cent.

The British established a centralised revenue system by appointing British-trained, salaried district collectors instead of intermediaries like zamindars. To reduce corruption, they introduced land surveys, cadastral mapping, and the Permanent Settlement, enabling direct tax collection from farmers. Secondly, they strategically monetised the economy through the cultivation of cash crops such as indigo, opium, jute, and tea. While legal frameworks, administrative rigidity, exploitation, and coercion ensured colonial revenue extraction, the popular uprising of 2024 serves as a reminder that the core objective of a constructing a post-colonial state should be the pursuit of an equitable system.

Many hope that the budget will include a proposal for a universal, life-cycle-based social security system. Such a transformative initiative could play a vital role in overcoming the ‘lower social trap’ created by crises in livelihoods.

Why is the revenue system not effective?

The roots of failure lie in patronage-dependent economy. According to the Centre for Policy Dialogue (CPD), in the 2022-23 fiscal year, tax evasion and illicit financial outflows cost the country an estimated Tk 2.26 trillion (2 lakh 26 thousand crore taka). Corporate tax evasion alone accounted for nearly half of this amount. The 'State of Tax Justice 2024' report states that multinational companies siphon off between three to five billion dollars annually through transfer pricing.

The reactionary nature of the tax system is further exacerbating inequality. Indirect taxes account for 66 per cent of the National Board of Revenue (NBR)'s total revenue collection, with 38 per cent coming from the flat-rate Value Added Tax (VAT). This places a disproportionate burden on low-income households. Only 1.4 per cent of the population files tax returns. The wealthy and elite are adept at exploiting loopholes, for example, by declaring themselves as non-residents or by reclassifying business profits as tax-exempt agricultural income.

Hundreds of thousands of retail businesses are evading VAT by underreporting their annual turnover under the guise of being “small shops.” According to the NBR, out of over three crore (30 million) businesses, only 550,000, or about 2 per cent, are registered for VAT. The informal e-commerce sector also operates without VAT registration. The customs administration is flawed. According to Global Financial Integrity, from 2009 to 2018, Bangladesh lost an average of USD 8.27 billion annually due to under- and over-invoicing of import and export goods. Additionally, prolonged legal entanglements fuel corruption, as seized goods lie in warehouses in uncertain conditions, creating further risks.

Modernising the revenue system

The current interim government is not in a position to undertake and implement the kind of major medium-term reform programmes needed to enhance domestic resource mobilisation. However, the budget can still present a reform strategy and a well-considered implementation plan to address the challenges. Here are five key pillars of the reform agenda:
First, the National Board of Revenue (NBR) should be replaced by an autonomous body. This new tax collection institution could be named the Bangladesh Revenue Authority.

A complete overhaul of the existing system is required to make it effective. Additionally, a separate policy-making institution could be formed by incorporating the existing Tariff and Trade Commission, and named the Bangladesh Tax and Tariff Commission. The core mandate of this body would be to move away from a patronage economy and strategically advance the monetisation of the economy.

Second, the tax code needs to be modernized with a focus on direct taxation. Simplifying the system, mandating digital payment methods, and establishing tax offices at the upazila level would help expand the tax base.

Third, it is essential to introduce technology-driven monitoring mechanisms. For instance, a Tax Identification Dashboard, integrating data from electricity bills, bank transactions, and land records, could enhance oversight. Block chain tracking for bonded warehouses and AI-powered risk assessments would help prevent fraud.\Fourth, enacting an effective transfer pricing law is urgent. Multinational companies must be required to submit master and local files as well as country reports. Strict penalties should be imposed for profit shifting.

Fifth, a green tax framework could be introduced. A carbon tax (for example, Tk 1,200 taka per tonne) could be levied on high carbon-emitting industries such as cement and textiles. The revenue generated could be allocated to the climate adaptation fund.

From multidimensional crises to universal social security

The country is facing multidimensional crises. According to World Bank projections, the poverty rate will rise from 20.5 per cent in 2024 to 22.9 per cent in 2025. Low spending on education and health (respectively 2 per cent and 2.34 per cent of the GDP), coupled with poor education results and high rates of youth not engaged in higher education, employment, or training (41 per cent nationally and 62 per cent among women), pose serious challenges to achieving demographic dividends. These multiple challenges also hinder the achievement of sustainable development goals.
There is rapid urbanisation, but cities are not becoming livable. Economic productivity is not increasing proportionally with the growing population density. The severe impacts of climate change could result in a loss of 5 to 7 per cent of the GDP.

Government allocations for social safety nets are inadequate, flawed, ridden with corruption, and politicised. Social safety net programmes are relief-based and have not yet become universal or rights-based. More than 100 fragmented programmes need to be brought under a single administrative authority.

Many hope that the budget will include a proposal for a universal, life-cycle-based social security system. Such a transformative initiative could play a vital role in overcoming the ‘lower social trap’ created by crises in livelihoods and build resilience so that citizens are not left behind by economic shocks.

A system like this would be a fitting tribute in memory of Abu Sayeed, who grew up in the village Babanpur of Pirganj upazila, Rangpur and was martyred in July 2024. Rangpur is also the very same district where Lord Beveridge was born.

* Dr. Rashed Al Mahmud Titumir is a professor of the Department of Development Studies, University of Dhaka​

 

[Saif]

What the budget says about reforms?

The finance adviser noted a comprehensive package of reform measures for restoring good governance, ensuring institutional accountability, and rebuilding a crumbling financial system.

en.prothomalo.com

What the budget says about reforms?

Staff Correspondent Dhaka
Published: 02 Jun 2025, 18: 16

Finance adviser Salehuddin Ahmed has presented the annual budget for 2025-26 fiscal year, with a comprehensive package of reform measures for restoring good governance, ensuring institutional accountability, and rebuilding a crumbling financial system.

In his budget speech, the finance adviser noted that the institutions have been severely weakened over the past one and a half decades due to widespread corruption and poor governance. He noted the reform commission reports and the interim government’s action plan in this regard.

Tackling corruption and strengthening accountability

Salehuddin Ahmed mentioned that the interim government has initiated amendments to the Anti-Corruption Commission Act, 2004. Between July 2024 and January 2025, 515 corruption cases were registered and 814 charge sheets submitted. Of 144 disposed cases, 59 led to convictions.

In line with the United Nations Convention Against Corruption (UNCAC), steps are being taken to recover laundered money from abroad. Recommendations by the Anti-Corruption Commission Reform Commission and findings from the White Paper on past corruption are being integrated into new policy measures.

Land, judiciary, and electoral reforms

To simplify land-related services and reduce litigation, the government has adopted the 'Land Offences Prevention and Remedy Rules, 2024', and is drafting the 'Land Zoning and Protection Act, 2025'. A digital land management system is being introduced to automate records and registration, leading to improved transparency and revenue collection.

Judicial reforms have also been prioritised. Thirteen monitoring committees comprising 13 High Court judges now oversee subordinate courts to speed up case disposal. The Supreme Court Judicial Appointment Ordinance, 2025 aims to ensure transparency in judicial appointments. An international-standard judicial academy is being established to provide modern training to court officials.

In terms of electoral reforms, the Bangladesh Election Commission has updated the voter list and is using Geographic Information System (GIS) technology to enhance transparency and accuracy. Legal amendments have also been made to prevent manipulation in future elections.

The interim government is also addressing injustices over the student-people movement in 2024. Many politically motivated and fabricated cases filed under the Anti-Terrorism Act and the Cyber Security Act are being withdrawn. To prosecute crimes against humanity committed during that time, the government has enacted the International Crimes (Tribunals) (Amendment) Ordinance, 2024, aligning it with the Rome Statute and international legal norms.

Financial sector reforms

Describing the financial sector as being on the verge of collapse due to 15 years of mismanagement, the finance adviser highlighted sweeping reforms to restore confidence and ensure accountability. The boards of several banks have been restructured, and the Bank Resolution Ordinance, 2025 has been enacted to deal with insolvency and liquidity crises. The Bangladesh Bank Ordinance, 1972 is being amended, and a weak asset management law is in development.

Three task forces are overseeing key aspects of banking reform—assessing asset quality, boosting regulatory capacity, and recovering stolen or laundered funds. Besides, the Bangladesh Bank has formed a financial stability committee to understand the dynamics of the financial sector and determine the steps to be taken to maintain the stability of the financial system.​

 

[Saif]

Budget comes with slim deficit

The interim government on Monday announced the new national budget at Tk 7.9 lakh crore, projecting ambitious revenue-earning measures to keep the deficit at tolerable 3.6 per cent.

www.newagebd.net

Budget comes with slim deficit
Revenue target high, local industries to face competition: economists
Shakhawat Hossain 03 June, 2025, 00:04

The interim government on Monday announced the new national budget at Tk 7.9 lakh crore, projecting ambitious revenue-earning measures to keep the deficit at tolerable 3.6 per cent.

Finance adviser Salehuddin Ahmed, while unveiling the new measures for the financial year 2025-26 in a televised presentation in the absence of Jatiya Sangsad, projected an overall income of Tk 5.64 lakh crore, of which some 88.4 per cent is expected to come via the National Board of Revenue through direct tax, duty and value added tax.

Limiting the undisclosed money investment facility in land and flats with a provision for declaring the source of fund and a steep hike in the tax for investments, the finance adviser also announced cancelling exemption of corporate tax and value added tax for industries.

Announcements have also been made to relax duty on imported products such as refined sugar, petroleum products, buses, minibuses, guns, mortars, rocket launchers, grenade launchers while there would be hike in duty on cosmetics, toys, cell phones, and different types of door locks in an effort to address the tariff rationalisation issue ahead of the country’s graduation from the least developed countries’ block in November 2026.

Economists said that the new tariff measures might force many domestic industries to face a tougher competition and draw criticisms from businesses.

Commenting that some aspects of the financing side of the budget are new, former World Bank Dhaka office chief economist Zahid Hussain observed that the overall revenue income target was highly ambitious.

He apprehended that shortfalls in revenue earnings would compel the interim government to downsize the overall budget or increase borrowings to meet the deficit.

According to him, the expenditure side of the budget is almost usual.

Out of the projected Tk 5.44 lakh crore non-development budget, the highest 22.4 per cent has to be set aside for payment of interest on internal and external borrowings and 19.1 per cent for subsidy and incentives.

The allocation to the public administration will account for 10.2 per cent of the budget, some one percentage point higher than the allocation made in the outgoing budget.

The finance adviser proposed to increase special benefit for the government employees in the new budget to meet the demand for dearness allowance.

Narrating the measures and actions taken over the past 10 months to improve the economic headwinds left behind by the ousted Awami League regime in the wake of a mass uprising, the finance adviser proposed increased rates of allowances under the social safety net programme along with higher allocations to the education and health sectors.

Proposing higher allocations for open market sales and the distribution of subsidised food for card holders against the backdrop of inflation, the finance adviser sanctioned Tk 405 crore for martyrs and injured persons during the July uprising in 2024.

Economists, however, said that the finance adviser had failed to live up to the expectation arising out of the true spirit of the uprising because of giving less focus on employment and investment by private sector businesses.

Demands for reducing inequality and increasing employment by students in the uprising found partial reflection in the budget, said executive director Selim Raihan of South Asian Network on Economic Modelling.

The responses are fragmented and limited, he said, adding that the budget lacked concrete policy guarantees or a road map for creating an investment-friendly environment.

Unlike like previous occasions, the finance adviser did not make any direct projection of GDP growth, inflation and private investment in his budget speech titled ‘Building an Equitable and Sustainable Economic System’.

The target of 5.5 per cent growth in gross domestic product, inflation at 6.5 per cent, and private investment at 24.31 per cent in FY26 are, however, made available in the Medium-Term Outlook of Bangladesh Economy.

Admitting that it is not easy to deal with the instability at the regional and global levels, the finance adviser projected net loans of Tk 96,000 crore from external sources and a net Tk 1.25 lakh crore borrowing from domestic sources to meet the deficit accounting for 3.6 per cent of the projected GDP at Tk 62.44 lakh crore in FY26.

This is the smallest budget deficit in a decade, largely because of a small annual development programme , worth Tk 2.3 lakh crore, adopted to implement only economically viable projects with main focuses on improving the implementation rate and quality of the projects.

The total new budget outlay is Tk 7,000 crore less than the original size of Tk 7.97 lakh crore announced in June 2024 for the outgoing financial year 2024-25, but higher by Tk 46,000 crore from the revised of Tk 7.44 lakh.​