New budget faces a tough revenue challenge

Bangladesh's upcoming national budget is expected to reach Tk 9.38 trillion, making it one of the largest budgets in the country's history. Alongside this, the government is reportedly setting a revenue collection target of Tk 6.95 trillion, a highly ambitious goal considering that the National Board of Revenue (NBR) achieved its highest-ever revenue collection of around Tk 4.09 trillion in the past. The significant gap between the previous record and the new target highlights the enormous challenge facing tax authorities.
To finance the budget deficit, the government is also planning to borrow around Tk 1.12 trillion from the banking sector. In addition, collections from national savings instruments are expected to increase substantially, with projections indicating a target of approximately Tk 150 billion, reflecting a notable rise compared to previous years.
However, achieving these targets may not be easy given the current economic environment. Inflation remains elevated at around 9.42 per cent, showing a slight increase in recent months. While unemployment figures have improved compared to historical levels, job creation has not accelerated at the pace needed to support stronger economic activity and household income growth.
A key concern is the relationship between national savings instruments and bank deposits. When the government raises returns on savings certificates to attract funds, depositors may shift their money away from banks. Conversely, when banks offer higher deposit rates, savings instruments often become less attractive. This creates a delicate balancing act for policymakers, as excessive reliance on either source can distort the financial market.
The broader issue is that sustainable economic growth cannot depend solely on government borrowing and savings mobilisation. Strong private sector investment remains essential for generating employment, expanding production and increasing incomes. When businesses invest and create jobs, consumer spending rises, tax revenues grow naturally, and the government's fiscal position becomes stronger.
Therefore, while the proposed budget reflects the government's confidence and development ambitions, equal emphasis should be placed on creating a business-friendly environment that encourages private investment. Policies that support entrepreneurship, industrial expansion and employment generation can help ensure that revenue targets become more achievable and that economic growth remains inclusive and sustainable.

Md. Zakaria
FAVP & Credit Analyst
CRM-CMSME Division
NCC Bank PLC, Head Office