The proposed budget for 2026-27 focuses on economic recovery and reconstruction, with the government aiming to revive investment, push institutional reforms, and restore confidence in the economy, said Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD).
However, she cautioned that budget implementation remains the biggest weakness, as the necessary institutional capacity has not yet been developed.
Speaking to TIMES of Bangladesh, Fahmida Khatun said the government wants to move the economy away from high inflation, weak growth, and the financial sector crisis towards investment-friendly and employment-dependent growth.
Allocations across various sectors reflect this priority, she noted. Key areas of focus include macroeconomic stability, increasing private investment, employment generation, banking sector reform, a business-friendly environment, and revenue collection.
The government has also emphasised modernising the revenue system, energy security, and social sectors such as health, education, and safety.
However, Fahmida Khatun identified budget implementation as the most significant challenge.
“The institutional capacity needed for budget implementation has not yet been developed. With the current institutions and their existing capacity, it will not be enough to implement this budget. Implementing the budget will be difficult,” she said.
The government should continue institutional reforms alongside budget implementation, she added. “Institutional reform needs to be expedited and accelerated more; only then will the budget be implemented.”
The CPD executive director noted that the government has correctly identified the problems facing the economy.
“The strongest aspect of this budget is that they are saying the economy will move towards recovery. Recovery and reconstruction are very necessary because we are currently on a weak economic foundation,” she said.
“They have taken several measures and have been able to identify the problem. They have actually taken measures according to that problem in many places. How they will do it and how much will be implemented is the main issue.”
Fahmida Khatun also raised concerns about funding. While the budget deficit itself is not a problem, borrowing from banks to meet the deficit could create difficulties when the private sector seeks loans.
“If the private sector does not get loans despite asking for them, or even if they get loans but at very high interest rates, then people will not be so motivated to invest,” she warned.
The government must try to raise funds from foreign sources at low interest rates and use those funds efficiently in productive sectors, she concluded. “If we cannot use them well, then it will become a foreign debt burden.”
