[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Easing fiscal strain: A key policy imperative

The emerging fiscal picture suggests a growing strain on public finances, one that reflects both structural vulnerabilities and the weight of immediate economic pressures. The sharp rise in allocations for interest payments, subsidies, incentives and cash loans signals not only a government attempt

thefinancialexpress.com.bd

Easing fiscal strain: A key policy imperative

FE

Published :
Apr 16, 2026 22:55
Updated :
Apr 16, 2026 22:55

The emerging fiscal picture suggests a growing strain on public finances, one that reflects both structural vulnerabilities and the weight of immediate economic pressures. The sharp rise in allocations for interest payments, subsidies, incentives and cash loans signals not only a government attempt to cushion its economy, but also one navigating an increasingly narrow fiscal space. With Tk 2.59 trillion already earmarked-and the possibility of this figure swelling further due to energy price volatility-the challenge ahead appears less about planning and more about managing uncertainty.

What stands out is the sheer scale of these obligations. When nearly 28 per cent of a national budget is absorbed by such expenditures, it raises a fundamental question about fiscal priorities and sustainability. While the increase from the previous year may appear incremental in percentage terms, the underlying drivers-global energy instability, inflationary pressures, and domestic financial constraints-suggest that these are not temporary spikes but symptoms of deeper, persistent challenges. The uncertainty surrounding global fuel markets, particularly in the light of ongoing geopolitical tensions, adds another layer of complexity. The acknowledgment that subsidy allocations may not fully account for a potential doubling of fuel-import costs reveals a degree of fragility in current projections. It underscores how external shocks can quickly destabilise even carefully constructed fiscal frameworks, forcing governments into reactive rather than proactive policymaking.

At the same time, the rising burden of interest payments reflects the long shadow of past borrowing decisions. As domestic borrowing costs remain sensitive to inflation and liquidity conditions, the risk of escalating debt servicing becomes more pronounced. This creates a cycle where more resources are diverted to servicing existing obligations, leaving less room for developmental spending. The projected increase in both domestic and external borrowing further illustrates this dilemma, as the government seeks to bridge a widening budget deficit without clear assurance of improved repayment capacity. There is also a political dimension embedded within these fiscal realities. The proposed social protection measures, such as expanded card-based support systems, highlight the tension between welfare commitments and fiscal discipline. While such initiatives may be well-intentioned and socially necessary, they inevitably add to the financial burden unless accompanied by corresponding reforms or revenue enhancements.

In this context, the call for rationalising subsidies becomes particularly significant. Blanket subsidies, while politically expedient, often dilute the impact of public spending by extending benefits beyond those who truly need them. A more targeted approach, focused on vulnerable populations and essential sectors, could not only improve efficiency but also ease fiscal pressure over time. However, such reforms require both administrative capacity and political will-neither of which can be taken for granted. Ultimately, the situation calls for a careful balancing act. The government must continue to provide necessary support in a volatile economic environment while also cautiously safeguarding long-term fiscal health. Failure to address these structural imbalances risks even a heavier burden on future generations, turning today's policy choices into tomorrow's constraints.​

 

[Saif]

Govt's revenue authority ponders property taxation

Government's revenue authority ponders introducing property tax -- on a limited scale to start with -- in the upcoming fiscal year to hook wealthy individuals onto wider-cast tax net. The planned property-taxation system is likely to replace the existing wealth surcharge, which has proven ineffect

thefinancialexpress.com.bd

CASTING TAX NET WIDER IN REVENUE HUNT
Govt's revenue authority ponders property taxation
New system likely to replace wealth surcharge failing to tax inherited, underreported assets
Doulot Akter Mala

Published :
Apr 17, 2026 00:35
Updated :
Apr 17, 2026 00:35

Government's revenue authority ponders introducing property tax -- on a limited scale to start with -- in the upcoming fiscal year to hook wealthy individuals onto wider-cast tax net.

The planned property-taxation system is likely to replace the existing wealth surcharge, which has proven ineffective in capturing taxes on inherited and underreported assets.

A senior official of the National Board of Revenue (NBR) says the proposal is currently under active review by a dedicated committee.

The panel is preparing three possible models to be submitted to high-level government policymakers by April 22, 2026.

"Initially, the tax may not apply to a taxpayer's primary residence. It could also exempt a second property if it is rented out and serves as the individual's sole source of income," the official told The Financial Express.

He further notes that the income-tax wing of the revenue board may not need to establish a separate valuation department as the tax could be imposed based on prevailing market value.

The NBR has already started drafting a "Wealth Tax Act," which is expected to be placed in parliament during the upcoming budget session.

The primary objective of the initiative is to mobilise revenue from high-net-worth individuals, particularly those residing in upscale areas such as Gulshan, Banani, Dhanmondi, and Baridhara in the capital, as well as Khulshi and Agrabad in Chattogram, and other elite zones in divisional cities.

Under the existing income-tax framework, individuals are required to pay a surcharge if their total assets -- both movable and immovable, including houses, vehicles, flats, plots, and land -- exceed Tk 40 million.

The surcharge also applies if a person owns multiple vehicles or residential property exceeding 8,000 square feet.

Importantly, the surcharge is calculated on the amount of tax payable, not on total assets. For instance, an individual with assets worth Tk 50 million, who pays Tk 100,000 in income tax annually, would pay an additional 10-percent surcharge, equivalent to Tk 10,000.

According to available data, the NBR collected Tk 2.96 billion in surcharge revenue up to February of the current fiscal year.

In FY2022-23, some 50,053 taxpayers paid Tk 6.95 billion in surcharge. In FY2021-22, a total of 14,854 taxpayers contributed Tk 6.26 billion while in FY2020-21, some 14,919 taxpayers paid Tk 5.99 billion.

Officials expect total surcharge collection to exceed Tk 10 billion in the current fiscal year.

Many wealthy individuals -- particularly in high-society urban areas -- remain outside the tax net due to widespread undervaluation of property in official deeds.

A national taskforce, headed by economist Dr Zaidi Sattar, has suggested that property taxation could raise total tax revenue by 3.0 to 5.0 per cent by FY2035, equivalent to roughly 1.0 per cent of Bangladesh's GDP or gross domestic product.

"Achieving this requires a comprehensive overhaul of existing instruments, valuation systems, and administrative practices," the taskforce report reads.


Currently, property transactions are subject to multiple taxes and fees, including a 1.5-percent stamp duty, 1.0-percent registration fee, 2.0-percent municipal or land-development tax, advance income tax (AIT) ranging from 1.0 to 8.0 per cent, and capital- gains tax on sellers.

"Together, these charges exceed 10 per cent of the declared deed value, creating strong incentives for undervaluation and the accumulation of undisclosed wealth," the expert report notes.

A key anomaly, the taskforce has observed, is the absence of taxation on property transfers through gifts, inheritance, or trusts -- major channels of intergenerational wealth transfers.

To address lacuna, the taskforce recommends introducing a Property Transfer Tax (PTT) of 1.0 per cent on gifts and bequests, to be applied at the time of mutation.

Another major bottleneck is the gap between official (mouza) value and actual market prices.


The committee has recommended developing a centralised Property Database (PDB) that integrates market-based capital value and rental income estimates. It also suggests conducting periodic (e.g. every five years) surveys and linking property- ownership data with e-TIN records for cross-verification.

"The current wealth surcharge suffers from both conceptual and administrative weaknesses, as it is based on income tax payable rather than actual wealth, and is constrained by limited valuation capacity," the report adds.

Revenue officials say wealth taxes are widely practiced in developed economies, where they contribute significantly to revenue -- around 2.0 per cent of GDP on average.​

 

[Saif]

Forex reserve crosses $35b again

Bangladesh’s gross foreign exchange reserves crossed $35 billion again on Thursday, supported by strong remittance inflows and sustained dollar purchases by Bangladesh Bank...

www.newagebd.net

Forex reserve crosses $35b again
Staff Correspondent 17 April, 2026, 00:12

Representational image. | New Age file photo

Bangladesh’s gross foreign exchange reserves crossed $35 billion again on Thursday, supported by strong remittance inflows and sustained dollar purchases by Bangladesh Bank.

According to central bank data, gross reserves stood at $35.03 billion on April 16. It crossed the level in February 24 for the first time since October 2022, when reserves were $35.8 billion.

Under the IMF’s BPM6 methodology, the figure was $30.36 billion on the Thursday.

The recovery follows months of active intervention in the foreign exchange market.

Since the beginning of the 2025-26 financial year, the central bank has purchased $5,613 million as of April 16.

The buying drive started on July 13, 2025, with an initial purchase of $202 million and continued in phases through April.

On Wednesday and Thursday, the central bank bought $120 million from 5 banks.

Officials said that intervention became necessary after excess dollar supply on the interbank market began pushing the exchange rate down.

On July 12, 2025, before dollar purchases began, the rate had fallen to Tk 119.5 per US dollar. Since then, it has stabilised at about Tk 122, with the central bank absorbing surplus dollars to prevent further appreciation of the taka.

The recent trend marks a shift from the previous two years, when the central bank had to sell dollars to defend the currency amid reserve depletion.

Since March 2025, however, pressure on the taka has eased. The pace of depreciation slowed as remittance inflows and export earnings strengthened, improving the supply side of the foreign exchange market.

With inflows outpacing demand, the central bank shifted its focus to rebuilding reserves, BB officials said, adding that by purchasing surplus dollars from banks, it had aimed to maintain exchange rate stability while strengthening the country’s external buffer.​