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Economists and private sector leaders have warned that the contractionary fiscal and monetary stance in the budget for the next fiscal year aimed at curbing inflation may jeopardize broader objectives such as restoring economic stability, increasing incomes, and reducing poverty through higher investment and job creation.
The remarks came on Saturday from a seminar on national budget 2025-2026 titled "Debating Budget and Beyond" arranged by the Bangladesh Economic Association in the capital.
Power, Energy and Mineral Resources Advisor Dr. Muhammad Fouzul Kabir Khan spoke at the event as the chief guest.
He identified waste, corruption, and inefficiency as the major obstacles to Bangladesh's economic development and stated that neither politicians nor bureaucrats genuinely wanted to see an end to corruption.
AK Enamul Haque, Director General, Bangladesh Institute of Development Studies (BIDS), Abu Ahmed, Chairman, Investment Corporation of Bangladesh (ICB), Abdul Awal Mintoo, former President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), spoke among others as panelists at the event.
Professor Dr Mahbub Ullah, Convener, Interim Committee of the Bangladesh Economic Association, and Former Professor, University of Dhaka, chaired the event moderated by Professor Dr Mohammed Helal Uddin, Member Secretary of the interim committee.
Identifying waste, corruption, and inefficiency as the principal obstacles to economic development in Bangladesh, the chief guest of the event said, "From politicians to bureaucrats, no one genuinely wants to put an end to this entrenched cycle of corruption."
He cited glaring examples of mismanagement, including a power plant constructed six kilometers away from a water source solely to benefit a minister, and roads built without necessity, resulting in the squandering of public funds.
Dr. Kabir sharply criticized the proposed national budget, calling it a reflection of a "political vacuum," where state institutions have simultaneously been "destroyed and looted."
He emphasized that the interim government was determined to disrupt the legacy of corruption left by previous political regimes and establish a transparent, competitive economy through reforms and personal accountability.
"In Bangladesh, over the past 10 to 15 years, the country's key institutions including constitutional bodies have been dominated by a nexus of politicians, business groups, and bureaucrats," said Abdul Awal Mintoo. He stressed that while the interim government initiated reform efforts, greater attention must be paid to these structural issues.
He further criticized the current monetary policy, noting that while interest rates were rising and the private sector was facing contraction, public expenditure continued to expand unchecked.
"The government is borrowing a significant portion of the money deposited in banks. How will the private sector function in such a situation?" he questioned.
Highlighting the broader investment climate, Mintoo warned that no investor would be willing to invest without ensuring social order and access to capital.
Professor Mahbub Ullah remarked that although the interim government's proposed budget might appear conventional at the first glance, it served as a powerful instrument for shaping Bangladesh's economic trajectory and future development priorities.
He noted that the budget reflected critical decisions about where revenue would be sourced from and how funds would be allocated across sectors and population groups.
Professor Abu Ahmed cautioned against rushing to increase the tax-to-GDP ratio without clearly defining the sectors where the additional revenue would be spent -- particularly if there is no concrete plan to boost development expenditure.
"Everyone is talking about raising the tax-GDP ratio, and I support that too. But currently, the funds are being channelled into the revenue budget, where overstaffing is common -- positions requiring ten people are filled with fifteen, many of whom are drawing salaries without contributing. If the increased revenue was allocated to development spending, I would fully support it," he said.
Professor AK Enamul Haque stressed the need for a separate tax policy focused on investment and social justice.
He said the budget should have prioritized investment, employment, and innovation. He also highlighted the need to reduce reliance on money printing and to bring idle funds into the formal banking system.
The event featured nine papers presented by leading economists addressing critical topics such as deficit financing, gender allocation, health, education, employment, and other key priority areas of the national budget.
Presenting the paper titled "Labour Market in National Budget 2025-26" Professor Sayema Haque Bidisha, Pro-Vice Chancellor, University of Dhaka, said that containing inflation, stabilizing macro economy, stimulating private investment, generating employment and reducing poverty and inequality were the major challenges for the next budget.
However, the contractionary policies might hamper these goals through reducing investment, she added.
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