The proposed budget signals a structural shift toward capital market deepening, investment-led expansion and fiscal formalisation, according to BRAC EPL Stock Brokerage, which described the framework as “the most direct capital market reform agenda in recent budgets”.
The top-tier brokerage firm, leading the industry in serving foreign portfolio investors, said the fiscal architecture reflects a gradual move away from bank-centric financing toward equity, bond and long-term capital formation, alongside expanded digitalisation, tax base widening and regulatory restructuring.
Its analysts said the most significant reform is the conversion of Tax Deducted at Source from a final settlement mechanism into an advance tax system, reducing structural liquidity constraints across market intermediaries.
Under the existing system, brokerage firms, merchant banks, asset managers, the Central Depository Bangladesh Limited (CDBL) and exchanges face working capital pressure as source tax is treated as a final deduction. The revised framework makes the deduction adjustable and refundable, easing cash flow across the institutional market chain.
The budget also proposes a phased shift from T+2 settlement to T+0, alongside full digitisation of IPO processing through an integrated system linking issuers, issue managers, exchanges, CDBL and regulators.
Foreign investors will be able to repatriate or reinvest proceeds through non-resident investor taka accounts within one working day.
The policy direction also extends capital market development beyond equities into fixed-income expansion through corporate bonds, sukuk, green bonds, infrastructure funds and municipal bond structures, said Salim Afzal Shawon, Head of Research at BRAC EPL Stock Brokerage.
“Municipal bond frameworks could expand sub-sovereign financing capacity for urban infrastructure, reducing structural reliance on bank credit for long-term investment,” he added.
His team assessed the near-term impact as neutral to mildly positive, with medium-term outcomes dependent on issuance depth, liquidity formation and investor participation.
At the macro level, the Tk9.38 trillion budget maintains an expansionary stance while reducing domestic bank borrowing to Tk1.12 trillion from Tk1.18 trillion in the revised FY26 budget.
The analysts said the moderation may ease crowding-out pressure on private credit, though risks remain from banking sector fragility, external shocks and execution constraints.
The Annual Development Programme expansion and higher development expenditure share reflect a selective stimulus approach focused on infrastructure and human capital rather than broad demand expansion.
BRAC EPL said revenue strategy is increasingly anchored in formalisation, with expanded VAT compliance, digitised tax administration and tighter transaction monitoring aimed at widening the tax base.
While these measures support fiscal consolidation, analysts said they may raise short-term compliance costs for informal small and medium enterprises transitioning into the formal economy.
The budget maintains a dual-track financial stability strategy combining recapitalisation of weak banks with liquidity support and deposit protection measures.
It reflects continued reliance on state-backed stabilisation while governance reform proceeds gradually to restore confidence in financial intermediation.
BRAC EPL described the FY27 budget as reform-oriented and expansionary, with a clear structural shift toward investment-led growth, capital market deepening and formalisation.
Analysts said execution capacity, institutional coordination and investor confidence will determine whether policy intent translates into sustained capital formation.
