Budget to have little reflection of reform recommendations
The upcoming budget for the 2025-26 fiscal year will have no significant reflection of the reform recommendations made by the task force and committees related to economic affairs.
There will be no new economic roadmap either. Rather, the budget management will largely remain the same as in previous years, according to sources in the finance division of the finance ministry.
Experts said the lack of capacity for reforms and the absence of political will – both can be key reasons behind the situation. Therefore, another conventional budget is going to be announced under the leadership of finance adviser Salehuddin Ahmed. However, a notable difference is that the adviser is planning to deliver a shorter budget speech.
After the political changeover in August last year, a white paper formulation committee was formed under the leadership of Debapriya Bhattacharya, a distinguished fellow of the Centre for Policy Dialogue (CPD). Besides, the authorities formed a task force to redefine economic strategy, with former BIDS director general KAS Murshid as its chief.
The white paper committee submitted a 397-page report and the task force a 526-page report to chief adviser Professor Muhammad Yunus. Later, another committee was formed to reform the National Board of Revenue (NBR), and it managed to prepare an interim report only, instead of a comprehensive one.
Now, the finance division is not considering the recommendations while drafting the budget, leading to a concern over the future of economic reforms. The finance division officials said the budget will have instructions for implementation of some recommendations, while some proposals will be left for the next budget. The finance division believes that scopes for true reforms are limited unless there is an elected government.
What will happen to the white paper recommendations
The white paper committee recommended a two-year action plan, in addition to some short-term steps. Among the initiatives are to restore economic stability, prepare for FY 2026–27 alongside the upcoming year, determine reform priorities, formulate strategies for LDC graduation, accelerate progress toward SDGs, and initiate dialogue with development partners. But the upcoming budget will have no concrete steps to implement these recommendations.
In a speech on 16 December last year, chief adviser Professor Muhammad Yunus referred to the white paper report, saying the people were stunned by its findings. He noted that the public sensed economic damage under the previous fascist government, but the actual scenario was unknown until the report quantified it. The chief adviser also said the GDP growth rates shown in recent years were exaggerated and misleading.
Citing the chief adviser’s remarks, the white paper formation committee chief Debapriya Bhattacharya told Prothom Alo that the GDP growth figures from BBS were based on outdated data. “The chief adviser categorically stated that the figures were not accurate, but the upcoming budget is being drafted based on them. Here, I see a contradiction between the budget formulation and the chief adviser’s policy.”
The economist added that the finance adviser continued within the fascist framework. He revised the current budget, lowered revenue targets, and relied on indirect taxes for the next fiscal year, but refrained from clarifying the criteria of including or excluding priority projects.
Noting the parliamentary obligation to disclose quarterly updates, Debapriya also questioned why no quarterly economic statements were made, even though there is no parliament. “If it is not done, how will the people know if the government is doing good or bad?”
The task force recommended introducing a progressive tax system to increase taxes on the wealthy, boosting allocations for education and healthcare, and making services more accessible. It also proposed dividing Biman Bangladesh into two entities, and privatising one. The budget will have no initiative to implement this proposal.
The task force suggested nurturing around 1,500 export firms that earn over USD 1 million annually, but there will be no initiatives in this regard in the budget.
However, contractionary monetary policy is being maintained to control inflation as well as restore economic stability. The foreign currency reserve is now in relatively good shape, and its decline stopped before the new budget. Experts believe it remains a big challenge how these positive indicators can be used for real economic growth.
How will the economic strategy committee proposals be addressed?
KAS Murshid, the chief of the economic strategy redefining committee, said they expect some of their recommendations to be included in the upcoming budget, especially those over making AI and digital technologies more accessible in agriculture, industry, education, and healthcare.
He, however, remains doubtful about the fate of many significant proposals in the budget, including splitting Biman or supporting 1,500 exporters.
Future of NBR reforms
It is unknown how long the NBR reform committee may take to submit its report. Still, the government has already divided the NBR into two entities – policy department and implementation department – on the advice of the IMF. In the face of protest from the NBR officials, the government has now decided to amend the ordinance that divided the NBR.
When asked if there is anything new in the budget, a senior finance division official said, “Definitely. A special fund will be formed in the next budget to implement the recently promulgated Bank Resolution Ordinance.”
In this regard, finance adviser Salehuddin Ahmed told Prothom Alo over the phone last night, “It is not right that we have not taken recommendations from the white paper committee and the task force. We have taken into account their suggestions on money laundering prevention.”
He further said reality does not permit taking all the recommendations into account, and everything cannot be included in the budget. They have due respect to the significant recommendations, but those could not be considered due to practical constraints and limitations.