Originally posted in The Daily Sun on 2 June 2025
New budget eyes 5.5% growth, focuses on domestic revenue, fiscal discipline
Breaking with a 16-year tradition, the national budget for the fiscal year 2025–2026 will be presented outside Parliament—a move underscoring the country’s political and economic transition following recent upheaval. As Bangladesh grapples with economic stagnation, declining investment, and revenue shortfalls, Finance Adviser Dr Salehuddin Ahmed is expected to unveil a controlled and pragmatic budget, shifting the focus from debt-driven expansion to domestic revenue mobilisation and fiscal discipline.
“In the past, large budgets allowed big expenditures—but much of the money was wasted through corruption,” Dr Salehuddin recently said at a pre-budget briefing. “Our main objective this time is to ensure honest use of public funds.
We aim for realistic growth—targeting 5.5%, but not at the cost of economic pressure.”
The last budget outside parliament was presented in 2008 by then-Finance Adviser AB Mirza Azizul Islam under the army-backed caretaker government. That year’s budget stood at Tk99,962 crore. In contrast, the 2024-25 budget, presented by the now-ousted Awami League government, reached a record Tk7,97,000 crore. However, following a student-led uprising and public dissent, the government collapsed on 5 August, just one month into the new fiscal year. This year’s budget, expected to be around Tk7,90,000 crore, marks the first time since independence that the budget size has declined year-over-year.
Facing weak GDP growth and sluggish investment, the budget will target key sectors – infrastructure, power and energy, education, and healthcare—while avoiding extravagant mega projects or politically symbolic monuments.
“Monuments are decorative—their time is over,” Dr Salehuddin stated. “We’ll focus on building what’s essential – roads, power plants, hospitals, and schools with an eye on social development over vanity.”
The budget reflects a significant policy shift—greater reliance on domestic revenue instead of foreign loans. Initiatives are underway to expand the tax base and modernise tax collection, aiming to finance development sustainably.
However, economists warn that without meaningful structural reform and effective implementation, achieving the budget’s goals will remain difficult.
“There must be increased reliance on direct taxation through improved administration and possibly wealth taxes, while reducing dependence on indirect taxes,” experts noted.
Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), cautioned against expecting sweeping changes during a transitional government period.
“Though a dramatic fiscal overhaul is unlikely, incremental reforms are possible. Improving efficiency in tax administration through e-filing and e-invoicing could help. But broader reforms like comprehensive income or wealth taxes may be deferred due to political constraints,” she said, adding that efforts to restructure the National Board of Revenue (NBR) have already faced internal resistance.
The budget is also expected to tackle long-standing issues in the capital market. Reforms will focus on resolving negative equity problems, promoting new Initial Public Offerings (IPOs), and encouraging long-term investment.
“Stock market investment must be long-term,” Dr Salehuddin noted. “We’re working with the Bangladesh bank to address margin loan issues and expand IPO offerings.”
With Bangladesh at a political and economic crossroads, this budget is viewed as a test of fiscal responsibility and governance. As the country prepares for general elections, the public and policymakers alike will be closely watching whether the government can strike a balance between realistic aspirations and structural constraints.
