The government’s first budget may ultimately be remembered less for what it promises than for what it acknowledges.
Defending the proposed budget, Finance Minister Amir Khosru Mahmud Chowdhury and his economic team repeatedly conveyed an honest message that stood out amid the long list of allocations, incentives, and policy measures – Bangladesh’s economy will take time to fix.
At the centre of that message was the finance minister’s assessment that the country needs at least two years of economic repair before stability returns and the government’s broader ambitions can begin to materialise.
“Our limitations are significant in this budget. We are setting the trend,” he told a post-budget press conference at the capital’s Osmani Memorial Auditorium on Friday.
“Given where Bangladesh’s economy stands today, we need a two-year cushion period. The economy will stabilise in the third year. It will move forward in the fourth and fifth years. Then we will be able to deliver the promises we made to the people.”
The remarks amounted to the clearest explanation yet of how the government views the economic challenges it inherited and the strategy it intends to pursue over the next five years.
Rather than promising rapid gains, the administration is effectively asking the public to judge its performance in stages: repair first, stabilisation second and prosperity later.
That framework runs through much of the proposed budget.
The government has placed private investment, business competitiveness, social protection, skills development and financial-sector reform at the centre of its economic programme while arguing that years of institutional weakness, financial mismanagement and policy distortions must first be addressed before stronger growth can emerge.
The rationale for that approach became clearer during the press conference.
Bangladesh Bank Governor Md Mostaqur Rahman said nearly one-third of the banking sector’s resources had been lost through irregularities and misappropriation.
“When we took over, our first task was to stabilise the sector,” he said.
The governor described the rehabilitation of the financial system as a complex process involving mergers, governance reforms, recapitalisation and liquidity support.
The scale of the challenge is reflected in the budget itself. The government revised bank recapitalisation and restructuring expenditure to Tk41,558 crore in the current fiscal year and has proposed another Tk36,706 crore for FY2026-27.
The repair effort comes at a time when inflation remains elevated, the tax base remains narrow and the government is trying to revive private investment without increasing pressure on public finances.
Rahman also cautioned that recovering stolen assets would be a lengthy and uncertain process.
He noted that the global success rate for stolen asset recovery is below 2 percent and that such efforts often take seven to eight years.
The energy sector presents another legacy burden.
Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood Tuku said the government inherited a power purchase bill of about Tk56,000 crore and was forced to make emergency fuel purchases to maintain energy security.
He argued that years of underinvestment in domestic exploration and poor power-sector management had left the country exposed to costly imports and inefficiencies, and that the state has to pay the price.
Against that backdrop, the government’s budget strategy is built less around new mega projects and more around restoring productive capacity.
The finance minister repeatedly emphasised reducing the cost of doing business, improving the investment climate and expanding economic participation.
He argued that inflation could not be controlled through administrative crackdowns alone.
“Prices are never controlled by police action. They are controlled through policy and management,” he said.
The budget proposes a broad deregulation agenda, including faster online licenses and approvals, automated tax and VAT systems and a series of reforms aimed at reducing the hidden costs businesses face in Bangladesh.
Officials said the government wants to reduce reliance on debt-financed growth and create a more investment-driven economic model.
Finance Secretary Md Khairuzzaman Mozumder said dependence on bank borrowing would gradually decline while alternative financing instruments such as Sukuks would play a larger role.
The finance minister was even more direct.
“Local banks are supposed to lend to the private sector, not to the government,” he said. “We have corrected that trend.”
The government is simultaneously betting that social investment can support long-term economic recovery.
The finance minister described this year’s allocations for social protection, education and skills development as the largest social investment effort in the country’s history.
He said the objective was not only to protect vulnerable households but also to improve earning capacity and bring more people into the economic mainstream.
The budget’s emphasis on investment, entrepreneurship, skills development and deregulation reflects that broader philosophy.
Yet the press conference also highlighted the scale of the challenge ahead.
The government’s recovery strategy depends heavily on private investment. But private investment, in turn, depends on a banking system that officials themselves acknowledge remains under severe stress.
That tension lies at the heart of the recovery plan.
Questions from journalists also exposed some of the unresolved issues surrounding the roadmap.
When asked how many jobs the government’s programmes would create, the finance minister acknowledged that no precise employment target could be provided, arguing that outcomes would depend on how investment and economic activity evolve across different sectors.
Similarly, while officials outlined an ambitious programme of banking reform and restructuring, they stopped short of estimating the ultimate fiscal cost of fully repairing the sector or how much of that burden may eventually fall on taxpayers.
The government also provided no detailed timetable for reducing non-performing loans or measurable milestones for evaluating the success of its employment strategy.
Those unanswered questions underscore the uncertainty surrounding the recovery effort.
For households still grappling with high inflation and businesses waiting for cheaper credit and stronger demand, the message from the government’s economic team was clear: improvement is expected, but not immediately.
The administration has now defined the timeline by which it wants to be judged. What it has not yet defined is how voters, businesses and investors should measure progress along the way.
