[🇧🇩] Budget For 2026-2027

[Saif]

Big in numbers, tight in choices

Nineteen years ago, BNP finance minister M Saifur Rahman placed a national budget of Tk 69,740 crore for fiscal year 2006-07. Three governments have since come and gone, and BNP has now returned to power through a national election.

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Big in numbers, tight in choices

Rejaul Karim Byron and Ahsan Habib

Nineteen years ago, BNP finance minister M Saifur Rahman placed a national budget of Tk 69,740 crore for fiscal year 2006-07. Three governments have since come and gone, and BNP has now returned to power through a national election.

This time, Finance Minister Amir Khosru Mahmud Chowdhury is preparing to unveil the country’s 54th budget, which may exceed Tk 9.30 lakh crore for FY2026-27.

Despite the increase in size, the budget-to-GDP ratio has not changed much over the years. In 2006-07, the budget stood at around 12.68 percent of GDP, and is set to be 13.6 percent in FY27.

This suggests that while the economy has grown significantly in size, the government’s fiscal capacity has not strengthened at a comparable pace.

Bangladesh is therefore entering a phase where the scale of public spending is no longer the central issue. The more pressing question is whether the economy can sustain a larger budget amid rising debt, weak revenue mobilisation and institutional constraints.

Over the past two decades, the country’s socio-economic condition has changed noticeably. Electricity access has expanded, rural road connectivity has improved, mobile phone use has surged and internet-based communication has reshaped daily life. Large infrastructure projects such as the Padma Bridge and Dhaka Metro Rail have altered transport patterns and boosted economic activity.

These changes have also raised expectations.

Citizens now expect uninterrupted power supply, better transport systems, modern healthcare, quality education and improved urban services.

Dhaka dwellers want more metro rail lines, while people across the country want improved highways, second bridges across Padma and Jamuna and more industrial investment. As a result, public spending commitments have increased structurally. But, at the same time, fiscal space has tightened.

A growing share of the budget is now being absorbed by just operational expenditure. Interest payments on domestic and external borrowing have risen due to higher debt levels and elevated interest rates. Subsidies in energy, power and food are also high, while the proposed implementation of a new pay commission for public employees is expected to add further recurring pressure.

These factors leave less room for development spending, even as the overall budget size expands.

Weak revenue mobilisation remains a central challenge. Bangladesh continues to have one of the lowest tax-to-GDP ratios in South Asia, which limits the government’s ability to finance development without heavy borrowing.

The financial sector adds another layer of pressure. Non-performing loans have risen due to weak governance, political interference, lending irregularities and poor recovery. A fragile banking system reduces its capacity to support private investment and economic expansion.

Government borrowing from banks has also increased, crowding out credit available to the private sector and pushing up borrowing costs for businesses. The capital market has remained shallow and volatile, offering limited support for long-term financing needs. As a result, the economy remains heavily dependent on the banking sector.

Governance concerns and corruption further complicate fiscal management.

Delays in project implementation, cost overruns and allegations of irregularities in public procurement have reduced the efficiency of public spending.

A White Paper on the State of the Bangladesh Economy under the previous interim government estimated that around $234 billion may have been laundered during the previous Awami League period.

External shocks have also shaped recent economic pressures. The pandemic disrupted trade, employment and production. The Russia-Ukraine war pushed up global food and fuel prices, feeding inflationary pressure in import-dependent Bangladesh.

Inflation has remained above 8 percent since March 2023, eroding real incomes and weakening purchasing power. At the same time, war in the Middle East has added further volatility to global energy markets, increasing risks for inflation and foreign exchange stability.

Against this backdrop, Bangladesh faces a difficult policy balance.

Growth has slowed in recent years while inflation remains elevated. Expansionary fiscal measures could support growth, but they also risk worsening debt and price pressures.

Another important dimension is the role of the International Monetary Fund (IMF) under its ongoing programme. Reform commitments are expected to focus on raising tax revenue, improving banking, reducing subsidies, strengthening fiscal discipline and increasing exchange rate flexibility. While these measures may improve long-term stability, they carry short-term political and social costs.

For the finance minister, the job is not just to present a bigger budget. It is to rebuild trust in how public money is managed while dealing with limited resources and political promises.

He will have to make difficult choices. Money will need to go either to big infrastructure projects or to areas like health, education and skills.

In the end, the budget is not only about numbers. It will show how the government plans to manage a time of high expectations, tight finances, global uncertainty and weak institutions.​

 

[Saif]

Budget should be realistic, focus on employment

In an interview, Sayema Haque Bidisha, a professor at the economics department and also a former pro-vice-chancellor of Dhaka University,

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Budget should be realistic, focus on employment

Rejaul Karim Byron and Ahsan Habib

Sayema Haque Bidisha, a professor of economics at Dhaka University, suggests strengthening small enterprises in rural areas.

She cited a career preparedness programme recently launched at her university as an example of how universities can help students develop communication skills, interview techniques, and workplace readiness. “These are not expensive reforms,” she said. “Higher education institutions can build stronger industry linkages with relatively modest budgetary support.”
The upcoming national budget should focus on a realistic approach, aiming to bring inflation under control and create jobs by promoting private investment.

In an interview, Sayema Haque Bidisha, a professor at the economics department and also a former pro-vice-chancellor of Dhaka University, said one of the quickest ways to stimulate employment would be to strengthen small enterprises in rural Bangladesh through targeted policy support instead of costly incentives.

REVIVING RURAL SMES

The economist pointed to the struggles of rural entrepreneurs she met during field research in districts such as Kushtia and Tangail.

“We saw entrepreneurs producing goods and surviving through sheer personal effort, but many had little connection with institutional bodies meant to support them,” she said. “The problem is often not just only lack of financing, but also the lack of policy coordination, market linkage and access to information.”

Easier access to small loans, temporary interest waivers for micro-enterprises, and stronger links between entrepreneurs and supply chains could help sustain rural economies even if urban industrial expansion remains slow, the economist suggested.

BRIDGING THE SKILLS GAP

For job creation, the government should also focus on skills and a proper education system, she said, noting that Bangladesh’s education system suffers from a major disconnect with industry needs.

Many graduates leave universities without practical skills or career preparation.

She cited a career preparedness programme recently launched at her university as an example of how universities can help students develop communication skills, interview techniques, and workplace readiness.

“These are not expensive reforms,” she said. “Higher education institutions can build stronger industry linkages with relatively modest budgetary support.”

She urged universities and training institutes to focus more on industry-specific and career-oriented education rather than producing graduates for a narrow range of traditional jobs.

At the same time, she criticised Bangladesh’s broader training culture, saying many programmes remain overly certificate-focused without adequately connecting trainees to real employment opportunities.

“Training should not end with certificates,” she said. “It must be linked with internships, industries and actual job markets.”

WOMEN IN WORKFORCE

She identified caregiving, transport and agro-based industries as sectors with strong employment potential, particularly for women and semi-skilled workers.

Female labour force participation, she said, cannot improve without tackling structural barriers such as access to capital, market linkages and childcare support.

One of her strongest recommendations was the expansion of community-based daycare centres, particularly in urban low-income areas.

“A daycare centre can help one woman join the workforce while also creating employment for another woman running the service,” she said.

She also argued that Bangladesh needs to move beyond its heavy dependence on readymade garments for female employment and explore emerging sectors where women can play larger roles.

Even unconventional sectors such as transport could open new opportunities, she said, citing female drivers as an example of professions rarely discussed in Bangladesh.

A REALISTIC BUDGET

Throughout the interview, Bidisha repeatedly returned to one central point: Bangladesh’s next budget must avoid unrealistic promises and instead focus on practical, targeted interventions that deliver visible relief.

According to her, the biggest challenge facing the government remains revenue generation without increasing pressure on ordinary citizens already struggling with rising living costs.

“The real challenge is to expand direct taxation and bring more people into the tax net without putting additional burdens on lower and middle-income groups,” she said. “That has become even more important now because inflationary pressure is already rising due to fuel and other costs.”

As Bangladesh prepares to unveil its first national budget under a BNP-led government in nearly 17 years, expectations are mounting over whether policymakers can strike a balance between economic stability and public relief.

Bidisha said the answer lies not in grand promises or expensive mega reforms, but in a “realistic budget” built around inflation control, employment generation and targeted policy support for ordinary people.

She argued that Bangladesh no longer has the fiscal space for overly ambitious spending plans. Weak revenue collection, persistent inflationary pressure, sluggish private investment and widening inequality have narrowed the government’s room to manoeuvre, she said.

“Our tax-GDP ratio has declined further, while revenue mobilisation has historically remained weak,” Bidisha said. “The government has to think carefully about priorities and austerity while protecting the most important sectors.”

According to her, inflation should remain the government’s top political and economic concern because the purchasing power of ordinary citizens ultimately determines public confidence in the economy.

“At the end of the day, people care about whether essential commodities remain within their reach,” she said, describing inflation as a political economy issue as much as a macroeconomic one.

REVIVING INVESTMENT AND JOBS

The challenge is more complex than simply tightening expenditure. Bangladesh must also revive private-sector investment and job creation at a time when high borrowing costs and macroeconomic uncertainty continue to discourage businesses.

“If private investment remains weak for a prolonged period, pressure will build on employment generation, industrial performance and inclusive growth,” she said.

Bidisha believes the government should focus on what she calls “low-hanging fruit” instead of waiting for large-scale reforms that may take years to implement.

TAX THE ULTRA-RICH

She also warned that Bangladesh’s widening inequality is becoming increasingly difficult to ignore. To reduce the income gap, she proposed stronger progressive taxation targeting ultra-wealthy individuals who often remain outside the effective tax net.

“For years, the burden has largely fallen on compliant taxpayers,” she said. “Meanwhile, many wealthy individuals remain outside the effective tax net.”

Digitalisation, she argued, could play a major role in expanding the tax base beyond Dhaka and Chattogram, where many affluent individuals in district towns remain outside formal taxation systems.

She even suggested offering temporary incentives or rebates to encourage first-time taxpayers to formally register and enter the tax structure.

WELFARE TARGETING

Another major concern for the professor is the design and implementation of social safety net programmes. She warned that Bangladesh’s welfare system still suffers from “inclusion and exclusion errors”, where many deserving people remain outside support schemes while others receive overlapping benefits.

The government’s plan to expand family cards to millions of households could face similar challenges unless it is integrated with existing welfare databases and programmes, she said.

“There has to be a holistic mapping system based on NID information, so policymakers know who is receiving which benefits,” she said. “Otherwise, the real target groups may still remain excluded.”

Bidisha also stressed that urban poverty deserves far greater policy attention. While rural households often retain some access to basic food and community support, slum dwellers in cities remain highly vulnerable to inflation and income shocks.

She called for stronger urban-focused social safety programmes targeting low-income communities in slums and informal settlements.​