[🇧🇩] Budget for 2026

[Saif]

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.​

 

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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.​

 

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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.​

 

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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.​

 

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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.​