With opposition inputs, the budget debate finally matures, but constraints persist

On Thursday, Finance Minister Amir Khosru Mahmud Chowdhury unveiled the BNP government’s first budget in two decades. Only days earlier, Bangladesh Jamaat-e-Islami, for the first time in its history as the parliamentary opposition, presented a complete shadow budget of its own in a press conference. As did the National Citizen Party. This trend is something new, something to be welcomed. A mature democracy needs an opposition that responds to the budget with serious governing alternatives, not merely louder criticism. We have a gift for economists here: competing fiscal visions for FY2026-27, based on the same national accounts, side by side. The striking fact is not how far apart they sit, but how close.

The same skeletal structure

Start with the headliner numbers, since they look eerily similar. The government wants to spend Tk 9.38 lakh crore (proposed outlay) with a projected revenue of Tk 6.95 lakh crore and a deficit of around Tk 2.43 lakh crore. Jamaat’s shadow budget calls for total expenditure of Tk 8.39 lakh crore with a projected revenue of Tk 6.66 lakh crore and a deficit of Tk 1.73 lakh crore. Both remain well below the commonly accepted five-percent-of-GDP benchmark for deficits. And both come up with the same number of Tk 1.27 lakh crore for interest payments, one of the largest single-line items each must support.

Convergence is the first finding. The fiscal arithmetic facing any government in Dhaka today is relatively non-negotiable. A revenue-to-GDP ratio at seven percent is fixed; debt service consumes the greatest share of revenue; and an IMF programme still under negotiation leaves very little room to manoeuvre, no matter who writes the check. Where the documents differ significantly is not in the amounts, but in the theoretical framework for escaping the trap.

Revenue: Shared diagnosis, different ambition

Both budgets reject the instinctual response to fill shortfalls by increasing taxes. The finance minister has criticised the tax administration, which always fills gaps by forcing existing taxpayers to bear additional burdens. Instead, he has made efforts to expand bases through TINs (tax identification number), automation, and a higher threshold. Jamaat has made the same arguments regarding conversion of TINs into NIDs, automation of the National Board of Revenue (NBR), and rationalisation of tax expenditures, but has pushed further, suggesting the revenue crisis is institutional and constitutional and not simply a matter of rates. Additionally, Jamaat has suggested a more aggressive approach to increase revenue towards 14-15 percent of GDP through reforms of the NBR and Anti-Corruption Commission (ACC).

In this regard, Jamaat has shown some innovation. In contrast to the cautious plans put forth by the government, it sees direct taxation as a question of justice and not solely as a source of revenue. It would raise the tax-exempt ceiling to Tk 4.5 lakh, provide a per-dependent allowance, and allow expense rebates for education expenses, none of which appear in the government’s plan. The honest admission is that these are predictions from an opposition bench, yet to test their viability against the discipline of collection. Meanwhile, the government must account for the Tk 1.04 lakh crore shortfall that the NBR fell short by April. Ambition is cheaper outside treasury walls.

Investment versus welfare state spending

There is an evident philosophical difference in what each side seeks to purchase. The government’s organising theme is “economic democratisation and deregulation”: a single-window “Banglabiz” approval portal, four test gates for project approvals, a creative economy fund, and a green tilt via solar tax holidays, EV duty reductions, and import subsidies for staple goods and medicine. It is a supply-side, investment-led gamble.

Jamaat’s budget is unmistakably a welfare state document. It increases social protection allowances to Tk 1,000 per month immediately and Tk 3,000 over time, establishes an Islamic pension scheme, provides free healthcare to children under five years old and adults above sixty-five years old, and perhaps most boldly, nationalises all primary and secondary schools. Together, education and technology occupy nearly 15 percent of its total allotments. While the government also moves education and health closer to 5 percent of GDP each, Jamaat’s commitment is wider and more costly.

Two procedural ideas worth keeping

Hidden in the shadow budget are two changes to the fiscal process that the government should consider.

The first is Jamaat Ameer Shafiqur Rahman’s suggestion to bring the fiscal year into alignment with the calendar year. The fiscal year runs from July to June; thus, the last week of June is a mad dash to spend development funds at a time when road construction during the rainy season (and quality) is at its worst. Anyone watching roads being placed during rainstorms, dissolved into dust by autumn, knows the waste. Bringing the fiscal year into alignment with the calendar would place the biggest portion of its investment in dry weather, when construction is easiest, and that quality is best.

The second idea is simple. Submit the supplemental budget three months before the closure of the fiscal year, rather than tuck it in amongst the other budgetary revisions passed by parliament at a point when there is not enough scrutiny left for anything. As it exists currently, supplemental budgets pass along with new budgets, and the House passes a year’s reallocation, leaving no room to scrutinise the past budget. Getting supplemental bills out sooner allows the parliament to see where any money was spent before approving where money will go next year. This is neither a BNP nor a Jamaat issue; this is simply better public finance.

Is the shadow budget macro right?

The macro in the shadow budget is mostly right, although there are some important caveats. The deficit and debt ratios were internally consistent and conservative. However, its confidence in revenue rests upon assuming away corrupt practices and administrative inefficiency that have thwarted every previous reform effort. The recovery of laundered funds as a funding source is morally attractive, but operationally speculative; repatriation depends upon foreign court rulings and treaties—not budget lines.

The government plan has reversed weaknesses. Financing a seemingly modest deficit on paper requires large domestic bank borrowings in an environment where private credit growth has fallen to record lows and the banking sector carries a 30.6 percent non-performing loan ratio (as of December)—the highest in South Asia. A 6.5 percent growth-rate target seems ill-suited compared to less-than-four percent actual growth and an oil price shock due to conflict in Iran. Both budget documents are candid about the problem—but optimistic about solutions.

Should we take an opposition

document seriously?

On evidence, yes—though not because its numbers cannot be challenged, but because it confronts real constraints rather than trying to evade them. It assumes the same deficit ceiling, the same revenue floor, and the same burden on debt service that faces the government and argues for a different set of priorities among them. That is what a viable alternative budget should attempt to do. A healthy fiscal debate is not one where the opposition suggests a different mathematics, but where it accepts that mathematics and debates values.

As the national budget heads to parliamentary debate, the consideration should not be which document is bolder, but which institution can produce either document. Each document represents bets on whether the country can finally collect what it owes and spend it as promised. The numbers surprisingly agree with the magnitude of that bet.

Dr M Kabir Hassan is professor and Moffett chair in finance at the University of New Orleans in the US, recipient of the 2016 IDB Prize in Islamic banking and finance, and a member of the AAOIFI Ethics and Governance Board.

Views expressed in this article are the author's own. 

Follow The Daily Star Opinion on Facebook for the latest opinions, commentaries, and analyses by experts and professionals. To contribute your article or letter to The Daily Star Opinion, see our guidelines for submission.