Bangladesh's proposed budget is a weak and in parts "unprofessional" fiscal and macroeconomic framework, with its welfare-oriented aspirations undermined by limited implementation capacity and questionable underlying assumptions, says Dr Debapriya Bhattacharya.
The economist, also a distinguished fellow at the Centre for Policy Dialogue (CPD), made the arguments about such budgeting paradoxes while speaking Monday at a Citizen's Platform for SDGs, Bangladesh briefing titled 'National Budget 2026-27: What Is There for the Disadvantaged Citizens?' in the capital.
Dr Debapriya notes that although the policy direction of the budget appears broadly thoughtful and shows sensitivity towards low-income and vulnerable groups, it is "ultimately built on an underdeveloped fiscal structure that risks limiting its real-world impact".
He argues that the macroeconomic assumptions underpinning the budget do not fully align with current economic realities, pointing in particular to inflation, wage dynamics and savings trends.
According to him, FY26 growth of 4.14 per cent has failed to deliver inclusive outcomes as it has not translated into lower prices, meaningful employment expansion or improved earnings for disadvantaged populations.
He also questions the credibility of the inflation target of 7.5 per cent, saying that it appears disconnected from prevailing price trends.
Dr Debapriya further notes that low- and middle-income households are currently under a "triple pressure" of high inflation, stagnant real wages and declining savings, forcing many families to draw down their limited reserves simply to meet basic consumption needs.
He thinks expectations of a rapid economic recovery under the government's recovery, restoration and reconstruction approach are unrealistic within a one-year timeframe, given the structural constraints in key productive sectors.
He draws attention to weakness in major employment-generating sectors, noting that large-scale manufacturing growth fell to 1.76 per cent in FY26, while ready-made garment export earnings declined by 1.9 per cent between July and April, placing additional pressure on a sector that sustains millions of workers, particularly women.
He has stressed that without stronger momentum in agriculture, small and medium enterprises, garments and modern services, the benefits of growth would continue to bypass ordinary citizens.
He observes that past budgets have repeatedly relied on overstretching revenue-collection targets, a pattern he says is being repeated again, raising questions about feasibility in the absence of deeper institutional reform and improved tax governance.
However, Dr Debapriya points out that achieving these targets would require revenue growth of 52.9 per cent from a base that already missed its FY26 target by 22.7 per cent, making the assumptions appear highly ambitious.
He further highlights that around 59 per cent of incremental revenue is expected to come from indirect taxes such as value-added tax, customs duty and supplementary duty, a structure he says raises concerns of tax equity because such taxes affect consumers uniformly regardless of income level.
Value-added tax alone accounts for 32.9 per cent of the FY27 revenue target and 41.2 per cent of the incremental revenue, which he argues places disproportionate pressure on lower-income households.
He also warns that adjustments in VAT on essential goods and services, including LPG cylinders, restaurant meals and construction materials, could further increase cost-of-living pressures.
In addition, he notes, individuals earning between Tk 31,250 and Tk 37,500 per month may face higher marginal tax rates, adding to the fiscal burden on sections of the middle class already affected by inflation and weak income growth.
While critical of the fiscal structure, the economist acknowledges that the budget reflects a notable increase in social-sector prioritisation. According to the Citizen's Platform analysis, 59.5 per cent of incremental spending has been directed towards education, health and social protection, and social-protection expenditure has risen to 2.11 per cent of GDP and 15.39 per cent of the total budget, marking its highest level on record.
He notes that the government has consolidated social-security programmes from 95 to 90 and expanded Government-to-Person digital payments, now reaching over 32.6 million beneficiaries across 29 programmes, alongside the introduction of initiatives such as the Family Card and Farmer Card.
These steps, he says, indicate a policy shift towards welfare orientation, although he cautions that weak implementation capacity could limit their effectiveness.
He further points out that civil service pensions alone account for 24.51 per cent of total social-protection spending, which in effect reduces the fiscal space available for broader vulnerable populations.
He also mentions persistent gaps in coverage for informal-sector workers, climate-affected communities, indigenous people, Dalit population, persons with disabilities, third-gender communities and urban slum-dwellers, many of whom remain insufficiently targeted by existing programmes. The analyst also criticises the absence of unemployment insurance and the continued lack of a dedicated social-protection framework for informal workers, despite their large share in the labour market.
On external financing, Dr Debapriya cautions that the planned borrowing of around US$9.5 billion from institutions, including the International Monetary Fund, the World Bank and the Asian Development Bank, requires careful scrutiny to ensure that associated conditions do not adversely affect marginalised communities.
He also reiterates that energy subsidies are necessary but warns that the mechanisms for delivering such subsidies remain unclear. He further argues that wealth and inheritance taxes remain underutilised as potential revenue sources, while reliance on indirect taxation continues to dominate fiscal strategy.
At the same time, he says, increased taxation on savings instruments and financial assets risks discouraging small savers who depend on these instruments for financial security.
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