[🇧🇩] Budget for 2026

[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.

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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.​