Parliament on Tuesday gave its nod to the FY2026-27 budget amid manifold challenges to its implementation. However, the government remains determined to restore economic momentum by overcoming obstacles such as slowing growth, persistent inflation, weak revenue collection and mounting vulnerabilities in the financial sector.
With a total outlay of Tk938,000 crore, the budget sets ambitious macroeconomic goals, including achieving 6.5 percent GDP growth while reducing inflation to 7.5 percent. These objectives are desirable, but their success will depend less on optimistic projections than on the government's ability to implement difficult structural reforms.
The growth target is perhaps the most ambitious element of the budget. The finance ministry expects the economy to rebound sharply from its revised estimate of five percent growth in the outgoing fiscal year, while the Bangladesh Bureau of Statistics has provisionally estimated growth at only 4.14 percent.
However, such a dramatic economic turnaround within a single year will require strong expansion in industrial production, exports and, most importantly, private investment.
Yet the investment projections themselves raise doubts. Private investment, which has remained largely stagnant for more than a decade, is expected to increase only marginally from 21.22 percent to 21.33 percent of GDP. Although public investment is projected to rise significantly, sustainable economic growth cannot be driven by government spending alone. The private sector remains the principal engine of employment, productivity and innovation. Restoring investor confidence through policy consistency, improved governance, easier access to finance and a predictable business environment should therefore receive the highest priority.
The government's inflation target also presents formidable challenges. Bringing inflation down from the current average of 8.63 percent to 7.5 percent will require much more than conventional monetary tightening. Inflation in Bangladesh has increasingly become structural, driven by supply chain inefficiencies, rising food and energy prices, exchange rate pressures and global instability caused by conflicts in several parts of the world.
Equally challenging is the budget's revenue mobilisation target. The government expects to collect Tk695,000 crore, including Tk604,000 crore through the National Board of Revenue. Bangladesh's persistently low tax-to-GDP ratio and repeated failures to meet revenue targets over the past decade make this objective particularly difficult.
Expanding the tax base, improving compliance and digitising tax administration are all necessary reforms. However, their effectiveness will depend on consistent implementation, institutional capacity and the political will to curb tax evasion rather than simply imposing additional burdens on existing taxpayers.
The banking sector remains another major source of concern. The unprecedented rise in non-performing loans to Tk589,000 crore by March this year underscores the depth of the financial sector's weaknesses. Years of repeated loan rescheduling, regulatory forbearance and special waivers have failed to contain the crisis.
A fragile banking system discourages private investment, weakens credit flows and threatens overall macroeconomic stability. Restoring financial discipline through stronger supervision, improved corporate governance and decisive action against wilful defaulters has become indispensable.
Despite the mounting challenges in implementing the new budget, we believe the government will be able to overcome many of them while keeping the tax burden on citizens to a minimum.
