Budget presents bold vision but execution gaps loom large: BUILD

Bangladesh’s proposed budget for the 2026-27 fiscal year breaks from conventional fiscal policy through tax exemptions, tax cuts and wider automation, though structural vulnerabilities could undermine its targets, said BUILD, a public-private dialogue platform.

The Tk 9.38 lakh crore outlay, equivalent to 13.7 percent of the country’s gross domestic product (GDP), targets growth of 6.5 percent — up from 3.49 percent in FY2024-25 — and aims to reduce inflation to 7.5 percent from the current 9.2 percent.

Analysts consider both targets challenging given fragile macroeconomic conditions and ongoing geopolitical pressures.

The budget deficit stands at Tk 2.43 lakh crore, or 3.6 percent of GDP. Bank borrowing has been reduced to Tk 1.12 lakh crore — Tk 6,000 crore below the revised FY2025-26 estimate — easing pressure on the banking system and supporting private-sector credit, BUILD said in its budget reaction.

The revenue target of Tk 6.95 lakh crore, 17 percent higher than that of the current year, will be difficult to achieve without marked improvements in the efficiency of the National Board of Revenue (NBR).

A proposed 0.2 percent advance income tax at the retail stage raises concerns, as it risks burdening lower-income groups and stoking inflation.

On VAT reform, reducing the mandatory appeal deposit from 10 percent to 1 percent is significant, though stakeholders have urged similar relief for alternative dispute resolution cases.

Import taxes on electric vehicles have been cut — from 93 percent to 64 percent for bikes and from 93 percent to 80 percent for cars — but tax relief alone will not drive the green transition without dedicated financing and sustained policy support, BUILD said.