by Sheikh Mohammad Arif (Dhaka Bureau)
The economy of Bangladesh stands at a complex crossroads, besieged by a four-pronged crisis: high inflation, fiscal deficits, a mountain of debt, and stagnant investment. Compounding this is the intense pressure to fulfill the newly formed government’s political pledges. Against the backdrop of such a suffocating reality, intense scrutiny and deep analysis have begun over what the South Asian nation’s national budget for the upcoming 2026-27 fiscal year will look like.
At a pre-budget dialogue organized by the Citizen’s Platform on Monday (May 18) at the Lakeshore Hotel in Gulshan, the capital, Dhaka, the country’s leading economists, researchers, and civil society representatives issued a unified warning: ‘The upcoming budget is not merely a numbers game; it is set to be the ultimate litmus test of the government’s financial capacity and political will.’
The keynote paper titled ‘National Budget 2026-27: Political Commitments and Citizen Expectations’ was presented by Towfiqul Islam Khan, Additional Research Director of the prominent think-tank, Center for Policy Dialogue (CPD). The dialogue was chaired by Dr. Debapriya Bhattacharya, Convenor of the Citizens’ Platform and Distinguished Fellow at CPD.
The dialogue saw participation from Professor Dr. A Z M Zahid Hossain, Minister for Social Welfare and Ministry of Women and Children Affairs; Professor Mustafizur Rahman, Core Group Member of the Citizen’s Platform and Distinguished Fellow at CPD; Dr. A.K. Enamul Haque, Director General of the Bangladesh Institute of Development Studies (BIDS); Dr. Khondaker Golam Moazzem, Research Director at CPD; Professor Sharmind Neelormi of the Department of Economics at Jahangirnagar University; Dr. Md. Abu Yusuf, Secretary of the Ministry of Social Welfare; and Members of Parliament Saiful Islam Khan and Mahmuda Habiba, among others.
The Mirage of Revenue and South Asia’s Lowest Tax-to-GDP Ratio
For the upcoming fiscal year, the government is reportedly setting a massive revenue target of approximately BDT 6,95,000 crore, which incredibly requires an at least 42 percent growth to be achieved. However, the ground reality tells a starkly different story, with the revenue deficit for the current fiscal year projected to reach nearly BDT 1,00,000 crore.
Research indicates that Bangladesh’s tax-to-GDP ratio has plummeted to a mere 6.8 percent, ranking among the lowest in South Asia. The most alarming revelation is that due to tax exemptions and concessions granted to influential interest groups, the government loses revenue each year that is nearly equivalent to the total revenue it actually collects. According to analysts, without reforming this political culture of tax exemptions, scaling up social safety nets or development expenditure will remain entirely impossible.
Fueling the Inflationary Fire: Subsidies and the New Pay Commission
With rising food and energy prices in the global market, the pressure of subsidies on food, electricity, LNG, and agriculture will intensify in the next budget. Added to this is the recommendation of the 9th Pay Commission. Implementing the proposed new pay scale for government employees in its entirety could require an additional BDT 1,06,000 crore.
Researchers believe that while this is a politically popular decision, meeting this staggering expenditure will severely deprive key sectors like education, healthcare, and social safety nets for marginalized communities.
‘Zombie Projects’ and the Skeleton of the ADP
The wastefulness and structural weaknesses of Bangladesh’s Annual Development Programme (ADP) faced fierce criticism at the dialogue. Out of the 1,352 projects currently underway, 737 have already undergone multiple revisions.
During the discussion, many of these initiatives were dubbed ‘Zombie Projects’- projects that survive year after year with nominal allocations but register zero actual progress. This bureaucratic red tape is draining both the nation’s time and money.
IMF Conditionalities and the Debt Trap
The International Monetary Fund (IMF) has already categorized Bangladesh as a ‘medium-risk debt-distressed country.’ Due to depleting foreign exchange reserves, the government is now heavily relying on domestic bank borrowing. Consequently, credit flow to the private sector is being choked, hindering job creation and further stoking inflationary pressures in the market.
Political Agenda vs. Field-Level Reality
While people-centric initiatives planned as part of the new government’s election manifesto- such as ‘Family Cards’, ‘Farmers Cards’, mid-day meals, and free Wi-Fi in educational institutions- were welcomed, questions were raised regarding their transparency.
Researchers and civil society members argue that unless digital security, proper beneficiary selection, and local-level corruption and lack of accountability are addressed, these welfare projects will remain confined solely to paper.
Pressenza’s Perspective: Reform or Insolvency?
Bangladesh is now at a historic crossroads. On one hand lies the pressure of strict IMF conditionalities and the urgency to restore macroeconomic stability; on the other hand is the compulsion to meet the political expectations of the grassroots populace. The budget for FY2026-27 is not merely a financial statement; it will dictate whether Bangladesh treads the path of sustainable economic reform or plunges into a deeper crisis by succumbing to short-sighted, populist political policies. The success of the budget now hinges entirely on the government’s capacity for rigorous expenditure control and courageous administrative reforms.
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The Author:
Sheikh Mohammad Arif: Senior journalist & Panel Editor, Pressenza- Dhaka Bureau.
