Highly ambitious budget's implementation to be difficult

The proposed national budget for the fiscal year 2025-26 has been termed highly ambitious by panellists at a post-budget discussion, who said its implementation will be difficult in the current economic and political contexts.

Speaking at the discussion styled "Reflection, response and the road ahead: National budget FY 2025-26" and organised by the American Chamber of Commerce in Bangladesh (AmCham) at a hotel in the capital on Tuesday, they observed that the targets set for revenue collection, private investment, inflation control, and gross domestic product (GDP) growth appear overly optimistic.

The tax structure lacks the necessary reforms to significantly boost employment and investment. Meanwhile, allocations for the health and education sectors have remained largely unchanged from previous years and are inadequate for developing human capital, they said.

The event was chaired by AmCham President Syed Ershad Ahmed. The keynote presentation was delivered by Dr M Masrur Reaz, chairman of the private think tank Policy Exchange Bangladesh.

Dr Anisuzzaman Chowdhury, special assistant to the chief adviser, attended the event as the chief guest.

In his keynote, Dr Reaz stated that the budget lacks clear direction in terms of investment, employment generation, and structural reforms.

He said the projections for revenue, private investment, inflation, and GDP growth are excessively ambitious and unlikely to be achieved, especially in light of political instabilities and election-related uncertainties.

Although inflation appears to be slightly under control, it is insufficient to meet the targets. Without a significant increase in investment and job creation, achieving the revenue collection target will be extremely difficult, he also said.

Dr Reaz welcomed the government's initiative to increase the dearness allowance for public servants, noting that while it is a commendable step, the timing may not be ideal.

Commenting on the tax structure, he highlighted several business-friendly measures in the proposed budget, such as reduced VAT on liquefied natural gas (LNG) imports, increased subsidies, lower advance tax on industrial raw material imports, and reduced land registration fees.

However, he also noted several concerning aspects, including higher VAT on yarn and increased turnover tax on loss-making companies.

He criticised the absence of targeted initiatives to promote rural women's employment.

In his remarks, AmCham President Ershad acknowledged the budget's attempt to improve the tax structure.

However, he cautioned that unless the law and order situation improves, foreign investment will remain elusive.

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