Lacks fiscal steps to achieve ambitions

The Centre for Policy Dialogue (CPD) has described the proposed national budget for the fiscal year 2025-26 as exceptional in terms of its reduced size but observed that it lacks coherence between its stated objectives and actual allocations.

Presenting its analysis titled "CPD Budget Dialogue 2025: An Analysis of the National Budget for FY2025-26" at a post-budget dialogue held at the Lakeshore Hotel in the capital on Sunday, CPD Executive Director Dr Fahmida Khatun noted that while the budget claims to prioritise people over physical infrastructure and overall development over mere growth, these ambitions are not adequately supported by fiscal measures.

"The budget includes several positive initiatives - tax reliefs, targeted allocations, and increased taxation of harmful activities. However, it fails to address the ongoing economic challenges in a holistic manner that could bring genuine relief to citizens and businesses," she said.

Dr Khatun pointed out that the proposed changes in the income tax structure would disproportionately increase the burden on low- and middle-income groups over the next two fiscal years, while higher-income earners would face only a modest rise in tax liability.

"This goes against the principle of equity and a fair tax burden," she remarked.

She also flagged that public expenditure priorities remain misaligned with national strategic needs, with key social sectors, such as education, health, and agriculture, continuing to suffer from inadequate funding.

The CPD analysis raised concerns over the feasibility of the proposed fiscal framework, describing its macroeconomic assumptions as overly optimistic.

The GDP growth target has been set at 5.5 per cent for FY26, although the Bangladesh Bureau of Statistics (BBS) has estimated only 4.0 per cent for the outgoing fiscal year.

Similarly, the government expects inflation to fall to 6.5 per cent, even though the current 12-month average stands at above 10 per cent.

"Assumptions regarding private investment, credit growth, and public spending may not materialise given the prevailing economic and political uncertainties," Dr Khatun cautioned.

She also criticised the Annual Development Programme (ADP) for FY26, noting a decline in the share of continuing projects and a sharp rise in projects with only token allocations of Tk 100 or less.

"This is an objectionable development, indicating inefficiencies in planning and prioritisation," she said.

She welcomed allocations for youth development and employment generation and appreciated tariff rationalisation steps as part of preparations for graduation from the least developed country (LDC) status.

However, she argued that such measures fall short of addressing the structural weaknesses in the economy.

As the interim government prepares to approve the budget, the CPD strongly recommended a robust implementation strategy and called for a mid-term review to assess progress and make necessary corrections to ensure transparency and accountability.

"In view of the country's fiscal and economic realities, such a review would be critical to ensure that the budget delivers on its promises," Dr Khatun added.

Speaking at the event, Barrister Rumeen Farhana, assistant international affairs secretary of the BNP, called for an inclusive and welfare-oriented budget that ensures protection for workers, marginalised communities, and students.

"An inclusive and truly welfare-oriented budget is needed for Bangladesh's development," she said.

Executive Chairman of the Power and Participation Research Centre (PPRC) Dr Hossain Zillur Rahman described the budget as "traditional and prudent, but not impactful."

He urged the government to conduct a mid-term review, warning that if it does not, the civil society and citizens must take the lead.

Besides, he criticised the government for "listening a lot but taking little action," particularly regarding the widespread filing of fabricated cases.

Mahmud Hasan Khan (Babu), the newly elected president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), thanked what he termed the "July-August revolutionaries" for paving the way for a free and fair BGMEA election after one and a half decades.

He urged the government to delay the country's LDC graduation by at least three years, arguing that Bangladesh is not ready yet.

Syed Abu Naser Bukhtear Ahmed, chairman of Agrani Bank, emphasised the urgent need for banking sector reforms, calling financial stability a critical pillar for sustained economic growth.

Bangladesh Textile Mills Association (BTMA) President Showkat Aziz Russell warned that insufficient budgetary support for the garment sector could hinder the growth of one of Bangladesh's most vital industries.

He also criticised the government's continued injection of public funds into failing banks.

Dr M Masrur Reaz, chairman of Policy Exchange of Bangladesh, cautioned against a reactive approach to economic crises.

"The government must adopt proactive policies to stabilise critical sectors like banking and energy," he said.

Workers' rights advocate and Socialist Labour Front President Razequzzaman Ratan said the current economic policies have severely impacted the working class.

"The budget fails to address widening disparities in the workforce," he noted.

Doulot Akter Mala, president of the Economic Reporters' Forum (ERF), called for a shift from indirect to direct taxation.

"Indirect taxes disproportionately affect the ordinary people. A more progressive tax system targeting wealthier groups is essential," she argued.

CPD Distinguished Fellow Professor Mustafizur Rahman moderated and chaired the dialogue.

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