[🇧🇩] Budget for 2025- 2026

Date of Event: Mar 3, 2025

Source: https://www.newagebd.net/post/country/259214/fy26-budget-to-prioritise-reform-initiatives

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]

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.​