The government has to formulate the next national budget amid high inflation, slow revenue collection, stagnation in investment and global economic uncertainty. Economists have emphasized on formulating the budget keeping these two goals in mind in the current economic situation - dealing with short-term crises and long-term structural reforms.
Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), highlighted these issues at an event organized in the capital on Tuesday (March 10).
She made an analytical presentation on the current state of the country's macroeconomics and policy measures on the occasion of the upcoming national budget.
The presentation said that there are two types of trends - positive and negative - in various indicators of the economy. However, weakness in revenue collection, stagnation in investment and inflationary pressure still pose major challenges for the economy.
The presentation highlighted that the National Board of Revenue (NBR)'s tax collection growth in the first seven months of the current FY26 was about 12.9%. However, the target for the entire fiscal year has been set at 34.5%.
In this situation, to achieve the set target, about 59% growth in revenue collection will be required in the remaining period, which is not realistic, according to economists.
Due to the slow revenue collection, a deficit of about Tk60,000 crore has been created from July to January of the current fiscal year. According to analysts, this deficit may put pressure on the government's expenditure management and implementation of development programs.
The implementation of the Annual Development Program (ADP) is also showing a slowdown in the current fiscal year. The ADP implementation rate from July to January is only 20.3%, which is the lowest in the last one and a half decades.
According to the CPD, this slowdown is due to administrative complications in project approval and implementation, weaknesses in project management, and unnecessary project reviews.
However, analysts also believe that stricter project selection and cost management can have a positive impact on the effectiveness of development projects in the long term.
The government is having to borrow more from the banking system to meet the revenue deficit. In the first half of the current fiscal year, the government borrowed about Tk59,655 crore from banks.
Economists say that if the government borrows more from the banking sector, credit flow to the private sector may decrease. This creates a risk of hampering investment and industrial growth.
Although inflation in the country has decreased somewhat, it has not yet come down to a comfortable level. In recent times, general inflation has been around 9%.
Especially, food inflation has been relatively high, which has increased the cost of living of the common people.
According to analysts, a large part of Bangladesh's inflation is related to supply chain problems. As a result, it is not possible to control inflation by tightening monetary policy alone.
It is also important to increase agricultural production, improve supply chain and strengthen market supervision.
A mixed picture is also seen in the foreign sector. Export earnings have declined slightly in the first eight months of the current fiscal year.
However, expatriate earnings have increased and employment opportunities abroad have also increased. As a result, the balance of foreign transactions has improved somewhat.
At the same time, foreign exchange reserves are also gradually increasing and the exchange rate of the taka against the dollar is relatively stable, the presentation mentioned.
Private investment in the country has been on a downward trend for a long time. Currently, private investment has fallen to about 22% of GDP, which is one of the lowest levels in the last decade.
Foreign direct investment (FDI) has also not increased much. According to the CPD, if investment does not increase, it will be difficult to create new jobs. Employment pressure is also increasing as a large number of young people enter the labor market every year.
Bangladesh is going to get the status of a developing country from a least developed country in 2026. This change may reduce some benefits in international trade.
Therefore, economists are of the opinion that there is a need to take steps like diversifying exports, increasing the competitiveness of industries and reforming the customs structure from now on.
CPD executive director Fahmida Khatun said that it is necessary to set realistic revenue, expenditure and growth targets in the upcoming budget.
She also suggested giving special emphasis to improving the investment environment, ensuring competition in the market, strengthening social security programs and increasing agricultural production.
According to her, if the right policies are adopted, the upcoming budget can play an important role in moving the country's economy towards stability.