The government has placed macroeconomic stability at the centre of its economic recovery, restoration and reconstruction plan. It has pledged wide-ranging fiscal, monetary and institutional reforms to contain inflation, strengthen public finances and reduce debt dependency.
According to the budget document, the government said persistently high inflation over recent years has eroded household purchasing power and weakened the country’s economic foundation.
It said inflationary pressure has come not only from global shocks but also from domestic factors. These include supply chain inefficiencies, market distortions, weak competition and structural bottlenecks.
To protect citizens from rising prices, the government said it will strengthen foreign exchange reserves, improve external sector resilience and ensure stability in the foreign exchange market.
The document noted that Bangladesh’s import-dependent economy remains exposed to exchange rate fluctuations. It said depreciation of the Taka against major foreign currencies has significantly pushed up domestic inflation.
The government also said it will maintain close coordination between monetary and fiscal policy. It will ensure adequate credit flow to productive sectors.
It added that efforts will focus on improving external balances through export growth, remittance facilitation and careful management of non-essential imports.
Finance Ministry officials said these measures, along with better spending efficiency and sound fiscal management, will help keep the budget deficit within sustainable limits. They said this will also restore market confidence and support investment and production.
A key part of the fiscal strategy focuses on stronger domestic resource mobilisation.
As part of institutional reforms, the government has already started separating revenue policy formulation from revenue administration.
Under the new system, tax policy will be developed through a dedicated framework supported by expert input, evidence-based analysis and stakeholder consultation.
The government has also introduced a medium-term revenue strategy. It aims to broaden the tax base, improve compliance and strengthen transparency and efficiency in tax administration.
Planned reforms include expansion of the taxpayer base, digitisation of tax registration and return filing, stronger monitoring systems, modern VAT administration, improved withholding tax compliance and risk-based audit systems.
The budget also proposes improved taxpayer services and simplified procedures to encourage voluntary compliance.
It also calls for a full review of tax expenditures and exemptions to increase transparency, efficiency and accountability. Future tax incentives will require stronger oversight and clearer justification.
According to the budget document, Bangladesh’s revenue-to-GDP ratio currently stands at about 8 percent, while the tax-to-GDP ratio is around 6.8 per cent.
The government aims to raise these ratios to 11 per cent and 9.6 per cent respectively by FY2030-31 through policy and administrative reforms.
The document also raised concerns over public debt sustainability. It said current pressure stems from large-scale borrowing for what it described as corruption-ridden and poorly planned “vanity projects” under the previous regime.
It said the resulting debt burden has placed significant strain on the fiscal position.
To address the issue, the government aims to upgrade Bangladesh’s debt risk rating from “moderate” to “low”.
It plans to achieve this through stricter fiscal discipline, higher revenue collection, sustainable budget deficits and modern debt management systems.
The government also indicated a shift away from a debt-driven growth model. It emphasised building a self-sustaining economy driven by production, employment and private investment.
“Policies will be pursued to systematically reduce debt dependence and promote investment-led growth as the foundation of sustainable economic progress,” the budget document said.
