CPD finds FY27 budget ambitious but unlikely to deliver on key promises

Centre for Policy Dialogue (CPD) on Sunday said the national budget for FY2026-27 reflects a clear philosophy of economic recovery through human development, but its ambitious macroeconomic targets rest on shaky ground and the fiscal framework is unlikely to hold as proposed.

CPD Executive Director Dr Fahmida Khatun presented the think tank's Independent Review of Bangladesh's Development (IRBD) analysis at its Budget Dialogue 2026 held at a hotel in Gulshan, UNB reports.

The think tank put forward eight key observations on the FY27 budget, which Finance Minister Amir Khosru Mahmud Chowdhury presented to parliament on June 11.

CPD noted that the government's GDP growth target of 6.5 per cent represents a recovery from an estimated 5.0 per cent in the revised FY26 budget, but provisional data from the Bangladesh Bureau of Statistics (BBS) puts actual FY26 growth at only 4.14 per cent.

On revenue mobilisation, CPD said the government targets an 18.2 per cent increase in revenue collection to Tk 6.95 trillion (Tk 695,000 crore). However, its own projection based on data through March 2026 suggests actual FY26 collection may be around Tk 4.5 trillion (Tk 450,000 crore), implying that the required growth would be closer to 54.4 per cent.

The think tank welcomed the budget's reprioritisation of public expenditure toward human capital sectors, noting that allocations for health and education increased by 124 per cent and 42.7 per cent, respectively, compared with the revised FY26 budget.

However, it cautioned that both sectors suffer from persistently weak budget utilisation, with health-sector development spending utilisation falling from 80 per cent in FY15 to just 30 per cent in FY25.

On the Annual Development Programme (ADP), CPD said the Tk 3 trillion (Tk 300,000 crore) allocation, a 50 per cent increase over the revised FY26 figure, reflects an ambitious fiscal stance. However, only 35.4 per cent of last year's ADP was spent in the first 10 months, signalling low absorptive capacity.

It also noted that none of the eight mega projects scheduled for completion in FY27, including the Rooppur Nuclear Power Plant, is expected to be finished on time.

CPD raised equity concerns over the personal income tax structure, pointing out that lower-income groups face a proportionately higher increase in tax burden than those earning more than Tk 3 million annually.

On social protection, the Social Safety Net Programme (SSNP) allocation rose 13.9 per cent to Tk 1.44 trillion (Tk 144,000 crore) in FY27. However, CPD observed that pension management and agricultural subsidies together account for 43.2 per cent of the total SSNP allocation, although these programmes are not strictly targeted at the poor.

Regarding the government's pledge to create 10 million new jobs within 18 months, CPD found that budget allocations for four key employment-related ministries either declined or remained stagnant as a share of total expenditure.

The Ministry of Commerce recorded the sharpest cut, with its allocation reduced from Tk 9.09 billion (Tk 909 crore) to Tk 3.29 billion (Tk 329 crore).

CPD also highlighted the absence of a medium-term roadmap to address preference erosion ahead of Bangladesh's graduation from the least developed country (LDC) category, despite the government's formal request for a three-year deferral in February 2026.

“This budget is the first major opportunity for the new government to demonstrate its ability to drive economic recovery through sustained structural reforms,” Fahmida Khatun said, adding that its success would ultimately depend on the quality of implementation and the strength of institutional capacity.