Good budget in bad times

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