JS approves Finance Bill 2026 with amendments

The Jatiya Sangsad (JS) passed the Finance Bill 2026 with a good number of significant changes, including raising the income tax-free ceiling for individual taxpayers and withdrawing the proposed provision on the disclosure of investments.

Finance Minister Amir Khosru Mahmud Chowdhury moved the bill on Monday, which was passed by voice vote with Speaker Hafiz Uddin Ahmad, Bir Bikram, in the chair.

Following requests made by the Prime Minister during his budget discussion speech, the Finance Minister expressed confidence that Bangladesh would overcome its economic challenges through structural reforms and sound economic management, saying the proposed FY2026-27 budget is designed to restore stability, accelerate growth and ensure the benefits of development reach all citizens.

Delivering his winding-up speech on the proposed budget in Parliament, the finance minister said the government had inherited a fragile economy and weakened institutions but remained optimistic about steering the country towards sustainable growth.

He said the government’s economic strategy was built around a “3R framework”- Recovery and Stabilisation, Restoration and Reconstruction for Acceleration.

Responding to concerns over the budget’s projections of 7.5 per cent inflation and 6.5 per cent GDP growth, Amir Khosru said Bangladesh inherited a “devastated economy” after years of policy failures, corruption, capital flight and exchange-rate distortions, compounded by geopolitical tensions in the Middle East.

He said stronger performance in agriculture, industry, services, exports and remittance inflows, alongside ongoing policy reforms, would support economic recovery.

The government is also prioritising higher public and private investment, industrial expansion, infrastructure development and human resource development to achieve the growth target.

On revenue mobilisation, the minister said the government would broaden the tax base rather than raise tax rates.

Tax policy and tax administration are being separated, while automation, deregulation and anti-evasion measures would improve transparency and support businesses.

He also announced that traditional markets and small grocery shops would remain outside the proposed flat-rate VAT regime for small businesses.

Despite challenging economic conditions, National Board of Revenue collections have exceeded Tk4 lakh crore for the first time following the current government’s reforms, he said.

The minister pledged stronger fiscal discipline by reducing recurrent expenditure while increasing development spending. Development expenditure is projected to rise to 33.7 per cent of total expenditure in FY27 from 27.27 per cent in the current fiscal year.

Addressing public debt, Amir Khosru said total public debt stood at Tk21.44 lakh crore, or 38.61 per cent of GDP, at the end of FY2024-25. Domestic debt accounted for Tk11.95 lakh crore (21.51 per cent of GDP), while external debt stood at Tk9.49 lakh crore (17.10 per cent of GDP).

To reduce debt dependence, the government plans to lower bank borrowing by Tk6,000 crore next fiscal year, list state-owned enterprises on the stock market and expand alternative financing through bonds, asset securitisation and equity financing.

It also plans to establish private investment funds in Hong Kong, London and New York to mobilise foreign capital.

Highlighting efforts to strengthen financial governance, the minister said assets worth about Tk72,343 crore had been seized or frozen in connection with 11 major financial crime cases.

Bangladesh has also sent 23 Mutual Legal Assistance Requests to 13 countries to recover laundered assets, while legal proceedings have begun against six major borrower groups.

“Our message is clear-those who looted public wealth will not be spared, while depositors’ savings will remain protected,” he said.

The government will allow individual depositors of the five merged Shariah-based banks to withdraw up to Tk200,000 immediately from current and savings accounts, with the remaining funds to be repaid in phases.

Special arrangements have also been made for seriously ill patients, Hajj savers and DPS account holders.

To deepen the capital market, the minister proposed tax incentives, including exemptions on zero-coupon bond income, lower corporate tax for listed companies and removal of the Tk500,000 ceiling on mutual fund tax rebates.

He also said Bangladesh had voluntarily withdrawn from the previous IMF programme because certain conditions were not considered to be in the national interest, while remaining open to negotiating a new arrangement aligned with the country’s priorities.

The minister said the government is shifting towards an investment-driven economy, supported by deregulation, foreign direct investment, export-oriented industries and technology-based enterprises.

He also outlined plans to strengthen energy security through greater domestic gas exploration, higher LNG import capacity, the Second Eastern Refinery and raising renewable energy’s share of electricity generation to 20 per cent by 2030.

Acknowledging implementation challenges, Amir Khosru said the success of the budget would depend not on its announcement but on effective execution, supported by stronger institutions, digital monitoring and greater administrative accountability.