Ambitious budget faces test of delivery

Balancing ambitious election commitments with the need to revive a fragile economy, Finance and Planning Minister Amir Khasru Mahmud Chowdhury is poised to announce a record Tk 938,000 crore national budget for the 2026-27 fiscal year.

The proposed budget, the largest in the country’s history, reflects the government’s ambition to accelerate development, strengthen social protection and support economic recovery.

However, economists and policy analysts caution that the real challenge will lie in implementation rather than formulation.

Describing the budget as people-centric, the finance minister said it had been prepared with the interests of citizens from all walks of life in mind.

“The budget is intended to support economic restructuring and lay the foundation for sustainable growth after years of instability and economic stress,” he said.

Yet analysts note that translating these objectives into tangible outcomes will require significant improvements in governance, revenue collection and project execution.

The budget is expected to set a revenue target of Tk 6.95
lakh crore, alongside a projected fiscal deficit of Tk 2.43 lakh crore.

Revenue mobilisation, however, remains a major concern. Data from the National Board of Revenue (NBR) show that revenue collection recorded a shortfall of Tk 1.04 lakh crore during the July-April period of FY2025-26.

Although tax revenue grew by 10.6 per cent during the period, collections fell considerably short of the revised target of Tk 4.31 lakh crore, highlighting continuing weaknesses in fiscal administration.

The government is preparing the budget against a backdrop of persistent economic vulnerabilities.

According to Bangladesh Bank estimates, nearly Tk 5 lakh crore was lost from the banking sector over the years through loan irregularities and financial misconduct.

The capital market has also faced prolonged governance concerns, market distortions and declining investor confidence.

Many industries continue to grapple with liquidity constraints, higher production costs and restricted access to credit. While some factories have already suspended operations, others remain under financial pressure.
External risks have also intensified.

Ongoing geopolitical tensions in the Middle East have contributed to energy price volatility and disruptions in global trade, creating additional uncertainty for Bangladesh’s import-dependent economy.

The proposed budget is expected to allocate around Tk 3 lakh crore for the Annual Development Programme (ADP), underscoring the government’s commitment to infrastructure development and public investment.

However, development spending has frequently been hampered by implementation delays, cost escalations, weak monitoring mechanisms and institutional capacity constraints, reducing the overall effectiveness of public expenditure.

Rising debt-servicing costs are emerging as another significant challenge.
Officials estimate that interest payments on domestic and foreign borrowings could approach Tk 1.5 lakh crore in the next fiscal year, accounting for a substantial share of total government expenditure.

Economists warn that increasing debt obligations could limit the government’s ability to allocate resources to priority sectors such as education, healthcare, agriculture and social protection programmes.

The budget is also expected to incorporate several pledges outlined in the government’s election manifesto, including expanded social safety net programmes, universal healthcare initiatives, farmer and family card schemes, environmental projects and rural development programmes.

While these initiatives are expected to provide support to vulnerable groups and stimulate economic activity, their successful implementation will require substantial funding and administrative efficiency.

The government aims to reduce inflation to between 5.5 and 7 per cent while achieving GDP growth of 6 to 6.5 per cent in the coming fiscal year.

These targets remain significantly higher than forecasts from international development partners, including the World Bank, the IMF and the ADB, which have projected Bangladesh’s economic growth for the current fiscal year at between 4 and 4.7 per cent.

Finance Minister Amir Khasru Mahmud Chowdhury has acknowledged that restoring normal economic conditions may take at least two years, reflecting the scale of the challenges ahead.

Economists argue that the success of the record budget will depend less on its size and more on the government’s ability to pursue long-awaited reforms in revenue administration, banking governance, public expenditure management and investment facilitation.

Khandaker Golam Moazzem, Research Director of the Centre for Policy Dialogue (CPD), said the national budget should address immediate economic pressures while helping to ease the cost-of-living burden on ordinary citizens.

However, he emphasised that effective implementation would ultimately determine whether the budget achieves its intended objectives.