The forthcoming national budget for the 2026–27 fiscal year is being formulated under extraordinary economic pressures. High inflation, a widening revenue shortfall, sluggish investment, and slow implementation of development projects have collectively placed Bangladesh in a precarious financial position. The Centre for Policy Dialogue (CPD) has highlighted the urgent need for pragmatic fiscal measures, tax reform, initiatives to stimulate investment and employment, and strengthened social protection programmes.
At a media briefing in Dhaka on Tuesday, CPD Executive Director Dr Fahmida Khatun presented an initial analysis of the budgetary landscape. Special Fellow Dr Mostafizur Rahman observed, “The government’s first budget is being prepared at a time when the economy is grappling with both inflationary pressures and an investment slowdown. Without sound policy decisions, the risks could deepen significantly.”
Revenue Shortfall and Development Spending
According to CPD’s analysis, from July to January of the current fiscal year, the National Board of Revenue (NBR) recorded only 12.9% growth in tax collection, well below the annual target of 34.5%, resulting in an estimated shortfall of approximately BDT 60,000 crore. Concurrently, the implementation rate of the Annual Development Programme (ADP) stood at merely 20.3%, the lowest in 15 years.
| Indicator | Target (%) | Actual (%) | Shortfall / Note |
|---|---|---|---|
| Tax Revenue Growth | 34.5 | 12.9 | BDT 60,000 crore deficit |
| ADP Implementation Rate | 100 | 20.3 | Lowest in 15 years |
To meet the budget deficit, the government has increasingly relied on bank borrowing. Between July and December, bank loans totalled nearly BDT 59,655 crore. Economists caution that excessive reliance on bank financing may crowd out private investment.
Inflation and External Sector Performance
Consumer price inflation has remained in the 8–9% range over the first eight months, with rising food prices placing a strain on household budgets. Ongoing conflicts in the Middle East and potential disruptions to energy supply could exacerbate inflationary pressures. Meanwhile, the external sector presents a mixed picture: exports have declined by 3.2%, while remittance inflows and foreign exchange reserves have shown improvement.
| External Sector Indicator | July–February Outcome |
|---|---|
| Exports | -3.2% |
| Remittances | Growth observed |
| Foreign Exchange Reserves | USD 30.4 billion |
| Exchange Rate | Relatively stable |
Policy Recommendations
CPD recommends measures such as reduced taxes on renewable energy, higher levies on tobacco products, and increased investment in agriculture and social protection. For instance:
Customs duty on solar panels, wind turbines, and battery storage capped at 5%, with VAT at 10%.
Health development surcharge of 5% and VAT of 20% on cigarettes, bidis, zarda, and gul.
Ensuring adequate fertiliser supply and dredging canals to boost agricultural productivity.
Strengthening social protection via operationalisation of ‘Family Cards’ and ‘Farmer Cards’.
CPD emphasises that effective revenue reform, an investment-friendly environment, and reinforced social protection could stabilise the economy. The new budget represents more than a fiscal balancing exercise—it offers a strategic opportunity to steer Bangladesh toward sustainable and inclusive economic growth.