The proposed national budget for fiscal year (FY) 2026-27 contains several positive reform initiatives and policy measures, but its macroeconomic and fiscal targets appear overly optimistic in the context of Bangladesh's prevailing economic realities, the Centre for Policy Dialogue (CPD) said on Friday.
Presenting an analysis of the national budget at a programme in Dhaka, CPD Executive Director Fahmida Khatun said the budget seeks to address a number of economic vulnerabilities through fiscal, tax and sectoral reforms. However, significant challenges remain regarding revenue mobilisation, inflation control, private investment growth and implementation capacity.
"The budget includes a number of commendable initiatives, but achieving the stated targets will require strong institutional capacity, effective policy implementation and improved governance," she said.
According to the independent think tank, the government's macroeconomic framework for FY2026-27 appears ambitious, particularly in terms of gross domestic product (GDP) growth, revenue collection and inflation management.
CPD noted that the government has set a GDP growth target of 6.5 per cent for the next fiscal year, despite continued pressures on the economy arising from elevated inflation, a fragile external sector, energy-related constraints and subdued private-sector investment.
The organisation expressed concern that the projected revenue mobilisation target may prove difficult to attain. It observed that Bangladesh has consistently struggled to meet revenue collection goals in recent years, while the tax-to-GDP ratio remains among the lowest in comparable developing economies.
Although the budget proposes several tax reforms and measures aimed at broadening the tax base, CPD said effective implementation would be critical for translating those measures into higher revenues.
The think tank also questioned whether inflation could be brought down to the targeted level within the fiscal year. While acknowledging the government's commitment to containing price pressures, it pointed out that food inflation remains high and supply-side constraints continue to affect market stability.
CPD welcomed a number of reform-oriented proposals in the budget, including efforts to modernise the tax system, rationalise expenditures and strengthen social protection programmes. It also appreciated initiatives aimed at improving the business environment and supporting industrial development.
However, the organisation stressed that the effectiveness of these measures would depend on implementation quality rather than policy announcements alone.
The budget's financing strategy was another area of concern. CPD observed that reliance on domestic borrowing could increase pressure on the banking sector and potentially crowd out private investment if revenue collection falls short of expectations.
The think tank further highlighted the need for stronger monitoring and accountability mechanisms to ensure efficient utilisation of public resources. It urged the government to prioritise institutional reforms, improve public financial management and enhance transparency in budget execution.
CPD also called for greater attention to employment generation, investment promotion and support for vulnerable groups affected by inflationary pressures.
Despite its reservations, the organisation acknowledged that the budget contains several measures that could contribute to economic stabilisation and recovery if implemented effectively. It said prudent fiscal management, stronger governance and realistic policy targets would be essential for achieving the desired outcomes.
Overall, CPD concluded that while the FY2026-27 budget reflects an intention to pursue economic reforms and address structural weaknesses, many of its key macroeconomic assumptions and fiscal projections remain optimistic and will require substantial policy efforts to realise.
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