[🇧🇩] Budget For 2026-2027

[Saif]

Good budget in bad times

A national budget is not merely a financial plan. It reflects political commitment and sets the direction of travel.

www.thedailystar.net

Good budget in bad times

Mamun Rashid

A national budget is not merely a financial plan. It reflects political commitment and sets the direction of travel. The FY2026-27 budget arrives at a critical moment, shaped by a global slowdown, geopolitical tensions, trade imbalances, earnings shortfalls and deep domestic structural weaknesses. These realities demand closer scrutiny than usual. A careful reading suggests the budget may fall short of offering a credible roadmap for nurturing national capital. Revenue measures are prominently highlighted, yet several appear arbitrary, akin to “killing the goose that lays the golden eggs”. Such an approach is unlikely to ensure a steady economic path.

The proposed outlay of Tk 8.73 trillion is ambitious in current circumstances. The immediate concern is the revenue target of about Tk 6.36 trillion, heavily dependent on the National Board of Revenue (NBR). Over the past four fiscal years, the NBR has repeatedly missed its goals because of administrative inefficiencies, opaque policies and weak taxpayer trust. There is little sign of a firm push to use technology in tax collection or to strengthen transparency. At the same time, greater pressure on the middle-class risks eroding purchasing power further. On the expenditure side, more than Tk 2.53 trillion is earmarked for the Annual Development Programme (ADP). Infrastructure matters, but chronic weaknesses in implementation dilute its impact. Execution rates have hovered between 65 percent and 70 percent, and cost transparency remains doubtful. In some instances, the price of a pedestrian bridge rivals that of a four-storey building in upscale Dhaka.

Inflation remains the most acute social strain. Overall inflation has exceeded 9 percent, while food inflation has crossed 12 percent. For lower-middle-income urban households and rural families, living costs continue to tighten. Yet the budget offers no bold response. There is no clear plan for urban rationing, subsidised transport or housing support. Social safety net allocations may rise slightly, but per capita support remains inadequate. Investment and employment receive optimistic rhetoric but limited substance. Tax incentives and a single-window system are being talked about, but core obstacles remain unresolved: land complications, bureaucratic delays, political uncertainty and tight financial sector liquidity. Increased government borrowing from banks could crowd out private entrepreneurs, especially SMEs. Export-oriented sectors gain some tax relief, but dollar shortages and letter of credit constraints continue to deter investors.

The absence of meaningful banking reform is striking. Non-performing loans approach Tk 6 trillion, bank mergers face scrutiny, and governance concerns persist. Yet the budget outlines no concrete remedies. A sound banking system is essential to sustain liquidity and maintain balanced interest rates. External vulnerabilities also endure. Export earnings remain subdued, and foreign exchange reserves hover below $30 billion. Remittances have improved but still fall short of potential because of structural gaps and informal channels. The Middle East crisis could further disrupt overseas employment for blue-collar workers. This prompts a central question: how will such a large budget be executed? A budget succeeds only when it reflects ground realities. The economy is already weighed down by rising domestic borrowing, weak private credit growth, persistent inflation and a fragile safety net.

At this point, the budget could have marked a turning point by signalling administrative reform, disciplined execution and renewed public trust. Instead, it risks becoming another catalogue of figures and pledges without a clear framework for structural change. Bangladesh now needs a coordinated and inclusive strategy grounded in data and realism. Priority must go to private sector growth, transparent tax administration, efficient project delivery and stronger banking discipline. Reducing poverty ultimately depends on expanding investment and employment. That, in turn, requires broadening the tax base while lowering rates, a task that calls for courage, innovation and firm political leadership.

The writer is an economic analyst and chairman at Financial Excellence Ltd​

 

[Saif]

Big nat’l budget coming to finance important sectors

With a trillion?dollar economy in vision by 2034, the new government plans a big budget worth Tk 9.30 trillion for the next fiscal year for augmented funding of critically important sectors. In order to finance the substantially raised annual spending plan, the government has set a target to c

thefinancialexpress.com.bd

Big nat’l budget coming to finance important sectors
Financing poll pledges, facing impacts of ME war, govt employees' salary raise among broad heads

FE REPORT
Published :
Apr 13, 2026 00:45
Updated :
Apr 13, 2026 00:45

With a trillion?dollar economy in vision by 2034, the new government plans a big budget worth Tk 9.30 trillion for the next fiscal year for augmented funding of critically important sectors.

In order to finance the substantially raised annual spending plan, the government has set a target to collect some Tk 7.95 trillion as revenue in the fiscal year 2026-27, officials say.

The decisions were made at a meeting of the committee for coordination on fiscal, monetary, and currency exchange on Friday night, as the budgeting exercise is getting in gear with little over two months left before the current fiscal year ends.

Official sources say the new government will have to make large allocations to fulfill a number of its electoral pledges in the next fiscal year, face the impacts of the ongoing conflict in the Middle East, and enhance salary of employees partially, and so the budget size is going to be increased significantly.

"The Middle East conflict alone is eating up a big portion of government subsidies now, but its impacts on the economy will be much bitter in the next fiscal year," says one official.

As such, he adds, the government is giving big target to the National Board of Revenue (NBR) for collecting revenue to meet the growing expenditure.

Also, the high revenue target is set as Bangladesh's tax-to-GDP ratio remains one of the lowest in the world by many accounts. The International Monetary Fund has pushed Bangladesh to increase the ratio to 9.20 per cent in the next fiscal year from the current rate of around 6.6.

In the new budget, sources have said, the size of the Annual Development Programme (ADP) is going to be Tk 3.0 trillion, significantly higher then the current development budget amounting Tk 2.3 trillion.

The GDP-growth target has been set at 6.5 per cent for the next fiscal year while the government targets to keep inflationary pressure below 7.5 per cent then.

According to officials concerned, of the total ADP worth Tk 3.0 trillion for the next fiscal year, Tk 1.9 trillion, equivalent to 63.33 per cent of the total outlay, is set to be financed from government exchequer, while the remaining Tk 1.1 trillion is expected to be managed from external sources, mainly in the form of project loans and grants.

For the current fiscal year, the government initially approved an ADP of Tk 2.3 trillion, which was later revised down to Tk 2.0 trillion, comprising Tk 1.28 trillion from domestic resources and Tk 0.72 trillion from external financing.

The proposed allocation for the next fiscal year represents an increase of 48.44 per cent in domestic financing and 52.78 per cent in external financing.

According to Implementation Monitoring and Evaluation Division (IMED) data, ministries and divisions together spent Tk 591.34 billion up to February, accounting for 30 per cent of the total revised allocation.

The proposed ADP breakdown shows, Local Government Division (LGD) is set to receive the highest chunk of Tk 366.20 billion in the next fiscal, followed by the Road Transport and Highways Division (RTHD) with Tk 329.03 billion.

Health Services Division is likely to see a significant jump in allocation to Tk 206.08 billion, more than six-fold compared to its revised allocation of Tk 31.28 billion in the current fiscal, elevating its position to third from the 15th.

Power Division is expected to receive the fourth-highest allocation at Tk 191.86 billion, followed by the Ministry of Science and Technology with Tk 173.66 billion.

Among other sectors, Primary and Mass Education is set to receive Tk 168.48 billion in development budget, while Secondary and Higher Education Division is likely to get Tk 138.36 billion.

Sources say Finance and Planning Minister Amir Khasru Mahmud Chowdhury, who chaired the meeting, discussed the challenges now the country's economy faces due to the Middle East turmoil, especially the high import costs of fuel oils and gas and the possible way of their funding.

Also, he asked the finance officials to keep in mind "long-lasting impacts of the war fallouts on the economy, the inflationary pressure, and government's electoral pledges alongside gradual deregulation of the economy" while preparing the budget.​

 

[Saif]

No room for illusory budgeting amid fiscal strain

Bangladesh can no longer afford “surreal” budgets built on inflated projections and political convenience, warned eminent economist Debapriya Bhattacharya.

www.thedailystar.net

No room for illusory budgeting amid fiscal strain

Debapriya says in interview, calls for hard choices, tax reform, and a credible budgeting framework

Md Asaduz Zaman

Debapriya Bhattacharya

Bangladesh can no longer afford “surreal” budgets built on inflated projections and political convenience, warned eminent economist Debapriya Bhattacharya.

He urged the government to confront its fiscal realities through difficult but necessary reforms.

“Don’t make a surreal budget -- an illusory one that defies realities. Artificially inflated expenditures and income may be politically saleable at the moment, but everyone knows these numbers cannot be delivered,” he said.

“However unpalatable it may sound, the government does not have the luxury of fiscal profligacy. The guiding factor must be the government’s available fiscal space,” he said.

In an interview with The Daily Star, the distinguished fellow of the Centre for Policy Dialogue (CPD) shared his perspectives on the government’s upcoming budget for the fiscal year 2026-27.

He outlined potential avenues for revenue mobilisation, flagged concerns over public expenditure, and stressed the need for a credible and transparent fiscal framework to navigate mounting economic pressures.

At the core of the upcoming budget lies a critical challenge: how to mobilise adequate revenue without overburdening taxpayers.

According to Debapriya, a significant portion of potential revenue is lost through tax exemptions.

“Income tax exemptions alone account for around 3 percent of GDP. If you add VAT and customs exemptions, total tax expenditures rise to about 6.8 percent,” he said, citing data from the National Board of Revenue (NBR).

But he cautioned against blanket removal.

“The priority should be rationalisation. We need to assess whether these exemptions are disproportionately benefiting certain business groups and whether they are actually improving productivity and competitiveness of the sector concerned,” he said.

Ensuring that small and medium enterprises receive adequate tax support should also be part of that review, he added.

Beyond tax dispensations, the government faces growing fiscal pressure from demand for subsidies and incentives.

“Subsidies account for about 1.8 percent of GDP, with a large share going to the power sector. There are also significant export and agricultural incentives, Debapriya said.

“When you combine tax expenditures, subsidies, and fiscal incentives, the total fiscal exposure reaches around 9 to 10 percent of GDP. Including contingent liabilities, it exceeds 12 percent. That is substantial for an economy which collects less than 7 percent of GDP as total revenue.”

To address the existing revenue gap, Debapriya stressed the importance of expanding the tax base. Out of 1.28 crore tax identification number (TIN) holders, less than 23 lakhs (18 percent) actually pay taxes.

“The principle should be low tax rates with high coverage,” he said. “We need to bring more people into the tax net rather than increasing the burden on a small group.”

He also highlighted the need to distinguish between taxable individuals and taxable income.

“Someone may be within the tax net but have little taxable income, while others with significant income remain under-taxed. That imbalance needs to be corrected.”

He suggested exploring new areas of taxation, including property and inheritance taxes.

“In most developed economies, inheritance tax is used to address intergenerational inequality. You cannot tackle inequality by taxing income alone; asset inequality is far greater in our country,” he said.

Asset recovery, particularly by bringing back stolen resources and making large defaulters pay, could also provide an additional source of revenue if pursued effectively, he added.

SHRINKING FISCAL SPACE

Debapriya warned that Bangladesh’s fiscal space is narrowing, as operating expenditures continue to rise. The newly elected government will have to prudently consider the recommendations made by the National Pay Commission 2025 under the interim government.

“Salaries, subsidies, and interest payments are consuming revenue budget,” he said.

“Debt stress is now emerging as a major macroeconomic challenge.” Currently, the debt servicing liabilities of the government -- domestic and external -- are almost double the amount of total public expenditure for health and education.

He noted that public expectations from the new government remain high. Some early measures based on electoral commitments may appear to be populist in nature. However, these initiatives are being rolled out in phases and remain relatively contained in fiscal terms, he added.

URGENCY OF TAX REFORMS

Debapriya stressed that delays in tax administration reform, particularly within the NBR, could undermine domestic revenue mobilisation.

“If the reform process is not completed quickly, especially the institutional restructuring, tax collection may suffer at a critical time,” he warned.

He pointed out that both revenue collection and public expenditure will peak during the last quarter (April-June) of the current fiscal year.

“Reducing human interaction, minimising discretionary power, and ensuring transparency through digital systems are essential for improving efficiency and accountability,” he said.

For Bangladesh, he concluded, the way forward lies in realism, discipline, and coherent policymaking.

“We often see policy contradictions-- where one measure offsets another. That reduces overall effectiveness,” he said. Thus, there is a need for consistency and coordination.

“The opportunity is still there,” he said. “But it is narrowing.”

The policy expert urged the finance minister to adopt a pragmatic but structured approach to fiscal reform, stressing the need for policymakers to look beyond immediate pressures.

“My suggestion is simple: take the hard path, but place it within a medium-term budgetary framework -- a three-year horizon. That way, people can be assured that short-term difficulties will lead to longer-term stability,” he said.

“You should not be overly concerned about what happens in just one year. The real focus should be on where the national economy would stand before the next national election, he observed.

Using an analogy, he explained the need for short-term restraint to enable long-term gains.

“If you want to make a long jump, you have to step back first, gather momentum, and then leap forward. This is that moment-- we may need to pull back now to create the space for consolidation and future growth.”

STALLED CAPITAL MARKET REFORMS

Debapriya pointed to the long-standing proposal of offloading shares of multinational companies (MNCs), state-owned banks and enterprises (SOEs) to deepen the capital market.

“This idea dates back to the former finance minister Saifur Rahman’s time, but implementation has been continuously aborted,” he said.

The interim government also gave instructions to bring in shares of profitable SOEs and multinational companies to the capital market. The government and the MNCs each were to offload at least 5 percent of their shares. “But to no avail.”

He attributed the failure to bureaucratic resistance, as officials often benefit from maintaining control over these entities. Offloading the shares would have given the capital market some positive vibes and, at the same time, generated some much-needed resources for the government.

On the expenditure side, he expressed concern over the effectiveness of public spending, particularly under the Annual Development Programme (ADP).

“Many projects are delayed, repeatedly revised, and suffer from poor feasibility studies,” he said.

“Protracted land acquisition process and deficient project management, epitomised by inappropriate project directors, are also common.” There are more than 1300 projects under the ADP, one-third of which are six to eleven years old.

He recommended forming a dedicated review body to weed out the “zombie projects” that have been continuing without meaningful progress.

“There is also a need to appoint skilled project directors and, where necessary, bring in professionals from outside the government,” he added.

Improving the quality of spending, he noted, would increase public trust and tax compliance.​