Bangladesh must implement sweeping budgetary reforms to steer the challenges of its post-Least Developed Country (LDC) graduation, the Centre for Policy Dialogue (CPD) asserted on Sunday.
"With the economy at a critical juncture, the upcoming FY2026 budget must prioritize stability, resilience, and global competitiveness," said CPD Executive Director Fahmida Khatun at a media briefing titled 'Recommendations for the National Budget FY2025-26.' at the organization's Dhanmondi office in Dhaka.
She outlined a comprehensive roadmap, urging the caretaker government to adopt bold measures, including tax reforms, inflation control, energy sector restructuring, and enhanced domestic resource mobilization, to safeguard the nation's economic future.
The CPD has made it clear that Bangladesh cannot afford a business-as-usual approach in the FY2026 budget. The country's graduation from LDC status demands immediate and decisive action to address mounting fiscal pressures, including high inflation, sluggish revenue collection, and external economic vulnerabilities.
Fahmida Khatun emphasized that the government must set realistic targets and prioritize automation to strengthen domestic resource mobilization. Without these reforms, she warned, economic vulnerabilities will deepen, leaving Bangladesh ill-prepared to compete in global markets.
Taxation policies must be aligned with World Trade Organization (WTO) rules, with import tariffs and duties rationalized to ensure compliance and competitiveness. The National Board of Revenue (NBR) has already proposed structural reforms, including the separation of tax policy and administration, a move that Khatun insists must be implemented without delay. Digitalization, she stressed, is non-negotiable for improving tax compliance, broadening the tax base, and ensuring transparency in the system.
Citing inflation control remains a top priority, particularly in rural areas, where price hikes have disproportionately impacted low-income households for nearly two years, she called for stronger market oversight, investments in supply chain infrastructure, and a reduction in reliance on indirect taxes to alleviate the burden on vulnerable populations.
The power and energy sector, Khatun argued, requires urgent financial restructuring. Accumulated dues to independent power producers and foreign firms must be cleared, and subsidy burdens should be strategically reduced.
She urged a shift toward domestic gas exploration to reduce dependency on expensive LNG imports and advocated for fiscal policies that incentivize renewable energy investments thexcessive7 breaks and other measures.
With fiscal space shrinking and excessive borrowing from commercial banks crowding out private sector investment, Khatun emphasized the need for the government to seek foreign financing wherever possible.
She cautioned against setting overly ambitious revenue targets, urging instead for expenditures to align with actual revenue capacity to ensure fiscal stability.
"The time for half-measures is over. The FY2026 budget must be bold, forward-looking, and grounded in economic realities. Reforming taxation, improving automation, stabilizing inflation, and securing energy sustainability are not optional-they are imperative. Without these measures, Bangladesh risks financial instability and a weakened position in the global economy," she said.
The caretaker government must act decisively to ensure the nation's economic resilience and long-term prosperity, Khatun in the CPD's budget proposal press conference said.
