Budget: Old wine in a new bottle?

A national budget is more than a statement of revenue and expenditure. It reflects a government’s economic philosophy, political priorities and development strategy. Every year, a budget arrives with promises of growth, stability and prosperity. Yet its real test lies not in its size but in its credibility and ability to be implemented.

The upcoming budget for FY2026-27, estimated at Tk 9.38 trillion, is set to be the largest in the country’s history. For the BNP-led government, it is an opportunity to demonstrate economic competence and policy direction. However, a key question remains: does this budget represent a new approach to managing the economy?

The budget is being prepared at a difficult moment. Revenue collection remains below expectations, private investment is weak, the banking sector continues to face structural problems, and business confidence has yet to recover fully. Meanwhile, global uncertainty and domestic inflation continue to weigh on economic activity.

Against this backdrop, the government has reportedly set a revenue target of nearly Tk 6.95 trillion, with more than Tk 6 trillion expected from the National Board of Revenue (NBR). While ambitious targets can signal confidence, experience shows that revenue growth cannot be achieved simply by setting higher goals. It requires stronger economic activity, efficient tax administration, broader taxpayer participation and greater trust in public institutions.

One of the major weaknesses of Bangladesh’s tax system is its narrow base. Rather than bringing more citizens and businesses into the formal tax net, policymakers often rely on existing taxpayers for additional revenue. This places a heavier burden on compliant businesses and discourages investment. Expanding the tax base, reducing evasion, improving enforcement and accelerating digitalisation deserve greater emphasis than raising tax rates.

The next budget also projects a deficit of around Tk 2.43 trillion. Financing this gap will require substantial borrowing from domestic and foreign sources. The government plans to borrow more than Tk 1.1 trillion from the banking sector. While such borrowing may be unavoidable, it raises concerns about credit availability for private businesses. At a time when investment and job creation are urgently needed, policymakers must ensure that public borrowing does not crowd out productive private investment.

The government has targeted GDP growth of 6.5 percent and inflation of 7.5 percent in the coming fiscal year. Both goals are desirable but difficult to achieve. Global energy prices remain volatile, supply chain disruptions continue to affect costs, and domestic market management still faces challenges. Recent fuel and electricity price increases suggest inflationary pressures may persist.

The budget also contains several encouraging features. Education, healthcare, food security and social protection continue to receive priority. Expanded social safety-net programmes could provide important support to vulnerable households facing higher living costs. Family cards, farmer-support schemes, old-age allowances, disability benefits and skills-development programmes can strengthen social resilience if implemented effectively and transparently.

Another positive feature is the emphasis on the creative economy as a source of employment for young people. Information technology, freelancing, start-ups, innovation-driven enterprises and creative industries offer significant opportunities for a country where nearly two-thirds of the population is of working age. Turning this demographic advantage into productive employment will be essential for long-term growth.

Yet the broader challenge remains unchanged. Bangladesh has a new government with fresh political commitments, but many institutions responsible for policy formulation and implementation remain largely the same. The issue is not a lack of experience but whether these institutions can adopt new ideas and respond effectively to changing economic realities.

Ultimately, the success of the FY2026-27 budget will depend not on its size but on its ability to restore confidence, stimulate investment, create jobs and ease the burden on ordinary citizens. Bangladesh’s ambition of becoming a trillion-dollar economy will require more than larger budgets. It will require institutional reform, policy consistency and effective execution.

The writer is an economic analyst