The Budget That Bets on Trust

Budgets are often described as financial documents. In reality, they are political documents disguised as accounting exercises.

They reveal not only where a government wants to spend money but also what kind of society it hopes to build and, perhaps more importantly, what risks it is willing to take to get there.

The first budget of the current BNP government falls squarely into that category. At Tk 9.38 trillion, it is not merely a statement of expenditure and revenue.

It is a declaration of political intent. It seeks to tell a story about economic recovery, democratic renewal, social protection, private-sector confidence, and long-term reform.

Yet beneath the ambition lies a more fundamental question: can a government spend trust before it earns it?

The proposed budget arrives at a difficult moment. Inflation remains stubbornly high. Investment growth has been uneven. Revenue collection has lagged behind expectations.

The banking sector continues to struggle with structural weaknesses accumulated over years. Against this backdrop, the government has chosen an ambitious path rather than a cautious one.

Finance Minister Amir Khasru Mahmud Chowdhury described the budget as part of a journey toward a democratic, humane, and inclusive economy. The political message is unmistakable.

The government wants to distinguish itself from its predecessor not only through governance reforms but also through economic philosophy. The budget attempts to transform the language of economics into the language of political legitimacy.

This is perhaps the most interesting feature of the proposal. Traditionally, Bangladeshi budgets have focused on growth targets, infrastructure projects, and revenue projections. This budget is different because it seeks to connect economic policy directly with political transformation.

The emphasis on social security expansion, tax reform, investment incentives, creative industries, and domestic manufacturing reflects a broader attempt to demonstrate that economic inclusion can become a pillar of democratic consolidation.

Yet political imagination is often easier than economic execution.

The budget’s greatest strength is also its greatest vulnerability. Nearly every major promise depends on revenue that has not yet been collected.

The National Board of Revenue has been assigned a target exceeding Tk 6 lakh crore.

The challenge becomes apparent when one considers recent performance. In the current fiscal year, the NBR’s target stood at Tk 5.03 lakh crore. Actual collection reached only around Tk 3.70 lakh crore. The gap is not merely numerical. It reflects institutional limitations that have persisted for years.

The government appears aware of this problem. Rather than imposing dramatic new tax burdens on existing taxpayers, it has chosen to focus on expanding the tax base. In principle, this is a sensible strategy. Bangladesh’s tax-to-GDP ratio remains among the lowest in the region.

Increasing compliance and bringing new taxpayers into the system is economically healthier than continuously squeezing the same group of taxpayers.

However, there is a difference between identifying a solution and implementing one.

Consider the proposal requiring Taxpayer Identification Number certificates for opening most bank accounts. The logic is clear. Bangladesh has more than 170 million bank accounts.

Linking financial participation with tax registration could significantly expand the government’s database and improve compliance. Yet the success of such a policy depends entirely on administrative capacity.

For a citizen living in a remote village or a small upazila town, obtaining a TIN certificate may become another bureaucratic obstacle. If the process remains complicated, inefficient, or vulnerable to irregularities, a reform designed to increase inclusion could instead generate frustration. The challenge is not technological. It is institutional.

This institutional dilemma appears throughout the budget.
The government proposes tax relief on approximately sixty essential commodities, including rice, pulses, wheat, potatoes, onions, garlic, edible oil, fish, and livestock products.

The objective is obvious. After years of inflationary pressure, consumers desperately need relief.

Yet experience suggests that reducing taxes does not automatically translate into lower market prices. The effectiveness of such measures depends on competition, supply chains, market monitoring, and enforcement.

Consumers often hear announcements about tax reductions but rarely notice equivalent reductions at grocery stores. Without stronger oversight, the benefits may remain trapped somewhere between customs offices and wholesale markets.

The budget is more convincing when viewed from the perspective of investors.
Few things discourage investment more than uncertainty.

Businesses can adapt to taxes, regulations, and costs. What they struggle to adapt to is unpredictability. By outlining both immediate and longer-term plans for tax expansion and investment incentives, the government sends an important signal. Investors are being told that there is a roadmap rather than a series of ad hoc decisions.

This explains the substantial support offered to domestic industries. Pharmaceutical manufacturers will receive additional duty benefits for raw materials. Import duties on dozens of ingredients used in Active Pharmaceutical Ingredient production are being removed.

Electronic manufacturers receive protection and incentives. Electric vehicles enjoy significant tariff reductions. Benefits for electric bus and truck manufacturing are extended until 2031.

These measures reflect an industrial policy that seeks to encourage domestic value creation rather than simple import dependence.

The same philosophy extends into less conventional territory. The proposal includes incentives for the creative economy, reducing duties on musical instruments, film production equipment, and creative media technologies. The removal of VAT burdens on social media content creators signals recognition of a changing economy where creativity increasingly functions as a source of employment and export potential.

In many ways, these measures reveal a government attempting to prepare for an economy that will exist ten years from now rather than one that existed ten years ago.

However, ambition comes with costs.
The budget deficit remains substantial. Financing that deficit requires borrowing. The government plans to borrow Tk 1.72 trillion from the banking sector and another Tk 850 billion through savings instruments.

Borrowing is not inherently problematic. Every modern state borrows. The concern arises when borrowing becomes a substitute for reform rather than a bridge toward it.

Debt creates obligations that future budgets cannot easily escape. Interest payments are mandatory. Development spending is often discretionary. This means today’s borrowing decisions can constrain tomorrow’s policy choices. A government that borrows heavily to fund social protection, salary increases, and development programmes must ensure that future revenue growth keeps pace with future obligations.

Otherwise, budgets gradually become exercises in servicing yesterday’s decisions.

The proposal to expand social security illustrates this tension perfectly. The government deserves credit for recognizing the hardships facing low-income households. New programmes, including family card initiatives and expanded safety-net coverage, reflect genuine social concerns. These measures may provide immediate relief and strengthen social cohesion.

Yet social protection is most effective when financed through sustainable revenue streams. Citizens benefit not merely from receiving assistance today but from knowing that assistance will remain available tomorrow.

Ultimately, this budget is neither reckless nor revolutionary. It is something more unusual. It is a budget built on assumptions about trust.

The government is trusting that revenue collection will improve. It is trusting that taxpayers will cooperate. It is trusting that investors will respond positively. It is trusting that inflation will ease. It is trusting that institutions will perform better than they have in the recent past.

That is a remarkable amount of trust for a government only months into office.
Whether this budget succeeds will depend less on the brilliance of its ideas than on the strength of the institutions expected to implement them. Bangladesh has never suffered from a shortage of ambitious plans. Its recurring challenge has been transforming promises into outcomes.

The proposed budget therefore represents more than an economic blueprint. It is a test of state capacity. If implemented effectively, it could become the foundation of a more inclusive and productive economy. If implementation falters, the budget may join the long list of well-intentioned documents that promised transformation but delivered disappointment.

For now, the government has placed a large wager on the future. The size of the budget is impressive. The political vision is evident. The question that remains unanswered is whether Bangladesh’s institutions can match the scale of the government’s ambitions.

(The writer is an Academic, Journalist, and Political Analyst based in Dhaka, Bangladesh. Currently he teaches at IUBAT. He can be reached at nazmulalam.rijohn@gmail.com)