Originally posted in The Daily Sun on 8 April 2026
CPD report on budget strategy submitted to the Ministry of Finance
Many Challenges for the New Government
The tenure of the elected BNP government has not yet passed two months, yet the challenges it faces are steadily mounting. Most of these challenges, including a fragile economy, have been inherited from the previous administration. There are also pressures to continue reform programmes and to implement the election manifesto.
In addition, the need to reduce expenditure while increasing revenue, along with the energy crisis triggered by the Iran conflict, has placed significant new strain on the government. However, deciding which challenges to prioritise has itself emerged as a major challenge.
The Centre for Policy Dialogue (CPD), a private research organisation, has outlined these challenges and submitted a report with several budgetary recommendations to the Ministry of Finance. According to CPD, the first budget of the elected BNP government will include short-term strategies to address various challenges. However, to revitalise the economy and ensure structural stability, the government must adopt medium-term strategies. At the same time, it must continue efforts to implement its election manifesto.
Towfiqul Islam Khan, Additional Research Director at CPD, said, “Enhancing fiscal capacity, ensuring its optimal utilisation, and mobilising resources are major short-term challenges that will persist in the upcoming budget. To address these, the government will have to take some tough decisions. On one hand, there will be pressure for state reforms, and on the other, pressure to fulfil the promises made to the people through the election manifesto. However, while doing so, the government must remain cautious not to lose focus on ensuring economic stability. To maintain this stability, medium-term targets must be set alongside short-term goals; otherwise, the government risks losing direction.”
In its report to the Ministry of Finance, CPD identified key macroeconomic challenges including high inflation, low revenue collection, slow budget implementation, pressure from domestic and foreign debt, stagnation in investment, negative employment trends, declining exports, and the pressures associated with graduating from Least Developed Country (LDC) status.
According to CPD, inflation has been a major macroeconomic challenge for several years. Persistently high prices of essential commodities have become a normal feature of the market, placing severe hardship on millions of households. Low-income families, in particular, have lost purchasing power. This domestic pressure has been exacerbated by global uncertainty. CPD notes that tensions in the Middle East over the Iran issue have caused significant volatility in global energy markets. Rising energy prices are increasing import costs for import-dependent countries like Bangladesh, while also significantly raising production costs, thereby creating fresh inflationary pressure.
In this context, the government has an opportunity in the new budget to adjust revenue policies in a way that protects vulnerable low-income groups. The report states that both demand- and supply-side factors are driving inflation in Bangladesh, requiring attention to both monetary policy and specific supply sectors. Alongside tackling inflation, the government must increase focus on health, education, and agriculture. It should also ensure fiscal discipline by reducing unnecessary expenditure and limiting government borrowing from Bangladesh Bank.
The report further recommends targeted subsidies, rationalisation of tariffs on essential commodities, increases in minimum wages, and cash assistance for low-income families, along with health protection initiatives. Strengthening market monitoring, expanding open market sales (OMS) of essential goods, increasing government support for agricultural production—particularly through crop subsidies, crop insurance, climate-resilient yields, and cold storage facilities—are also emphasised. Additionally, expanding solar-powered irrigation could play a significant role in stabilising supply and controlling prices.
CPD also highlights the importance of institutional coordination, central bank independence, identifying seasonal price fluctuations, enhancing climate resilience, formalising the informal sector, reducing revenue deficits, and encouraging investment in renewable energy. These measures, it says, would contribute to lowering prices and ensuring financial stability.
The organisation has proposed 11 key recommendations for the upcoming budget. These include: ensuring coordination between fiscal and monetary policies; adopting a realistic budget framework; strengthening market governance; rationalising tariffs in preparation for LDC graduation; increasing budget allocations to ensure one-stop services for business and investment; moving away from large generator-based power, particularly fuel-based plants; increasing allocations for climate change; consolidating farmers’ benefits under a single framework; and raising budget allocations for education and health.
Commenting on the issue, CPD Executive Director Dr Fahmida Khatun said, “The energy crisis stemming from the Iran conflict may further intensify inflation. Therefore, coordination between fiscal and monetary policies is essential. In addition, alongside increasing energy supply, cost-saving measures must be adopted to reduce demand. The government must take initiatives to increase revenue and reduce the budget deficit. Above all, a realistic and implementable budget must be formulated in this time of crisis.”
