Govt plans to shift fiscal year from July-June to April-March

Highlights

• Finance Ministry is reviewing legal and administrative changes needed.
• Shift aims to reduce monsoon-related delays in development projects.
• Transition would require major changes across government financial systems.
• Digital dashboards will track project progress using traffic-light signals.
• Economists warn fiscal-year change alone cannot eliminate project waste.

The government is planning to change Bangladesh's fiscal year from the current July-June cycle to April-March, with a proposal expected to be placed before a cabinet committee soon, according to finance ministry sources.

A senior finance ministry official, speaking to The Business Standard on condition of anonymity, said Finance Minister Amir Khosru Mahmud Chowdhury had instructed officials to prepare the proposal.

The Budget Wing of the finance ministry is now reviewing what changes would be needed to laws related to the fiscal year, the budget-making process, the tax system, government accounting, and the implementation of development projects.

Officials say the idea behind the shift is to address a major bottleneck in development projects: the monsoon. This will provide a more favourable timeline for project planning, procurement, and execution.

Once the review is completed, the proposal will be placed before the cabinet committee. If the committee approves it, necessary changes will be made and the new system will be introduced from the next fiscal year.

The senior official said opinions would be sought from relevant officials on how and in which month the current fiscal year should end. The work of two fiscal years would run alongside each other during April, May and June next year.

Bangladesh's fiscal year currently runs from 1 July to 30 June, a definition also set out in the Finance Act.

Fahmida Khatun, executive director of the Centre for Policy Dialogue, said bringing forward the end of the fiscal year could help reduce delays and waste in development projects.

A similar initiative was taken in 2010, but was ultimately not implemented, according to the finance ministry official.

The government is also taking measures to improve project implementation, including plans to introduce digital tracking dashboards across ministries.

The dashboards will use red, yellow and green signals to show project progress. Prime Minister Tarique Rahman is expected to inaugurate the system this month, finance ministry sources said.

Reforms are also being introduced in areas including the appointment of project directors and construction rate schedules to strengthen accountability.

Why change the fiscal year?

Explaining the rationale behind the proposed shift, those involved in the process said experts and contractors had long recommended changing the July-June fiscal year cycle. The final months of the fiscal year, particularly April to June, coincide with Bangladesh's rainy season, making development work difficult.

In June, projects often face pressure to show that allocated funds have been spent. This can lead to rushed implementation, poor-quality work and waste of public money. Roads, bridges, water development and local government projects are particularly affected by rainfall and waterlogging.

Under an April-March fiscal year, the final three months would fall between January and March, moving the end of the financial year away from the monsoon. Officials said this could allow better scheduling of planning, tendering, project implementation and bill payments.

Changes across govt systems

According to ministry officials, the change would affect more than the development budget. Revenue collection, tax assessments, income tax returns, VAT, government accounting, budget preparation, annual reports and government software would all need to be adjusted.

The Tk9.38 lakh crore budget for the fiscal 2026-27 came into effect on 1 July and was prepared under the existing July-June framework. An interim arrangement would therefore be needed to close the old fiscal year, determine the duration of the transition period and align the existing budget with the new timeframe.

Officials said the transition would be a major administrative and accounting challenge. 

Government accounting and budget software, tax systems, banking and financial reporting, development plans, procurement schedules, the annual performance indicators of ministries and departments and fund-release arrangements would all need to be brought into line with the new fiscal year.

For this reason, officials said the change should not be viewed simply as moving the calendar forward by three months.

For contractors, changes would affect tendering, project timelines and bill payments. Project directors would also need to revise annual procurement and fund-release plans, while projects already designed around the July-June cycle would have to be adjusted.

Jamaat proposed Jan-Dec

The issue was also featured in a 2026 budget debate. Jamaat-e-Islami proposed changing the fiscal year to January-December.

On 29 June, Jamaat Ameer and Leader of the Opposition Shafiqur Rahman told parliament that the July-June system often resulted in work being completed towards the end of the fiscal year merely to show that bills had been processed.

He proposed a January-December fiscal year, along with presenting a supplementary budget at least three months before the end of the fiscal year and reviewing budget implementation every four months.

Will changing the fiscal year stop waste?

Economists say changing the fiscal year alone will not automatically stop rushed spending at the end of June, delays in projects, poor-quality work or waste of public money.

They said reforms would be needed across the entire system, including project approval, the tendering process, appointment of project directors, fund releases, procurement management and monitoring of project progress.

Fahmida said the demand for changing the fiscal year had existed for a long time and had practical justification.

"In particular, the final three months of the current fiscal year fall during the monsoon season in Bangladesh. This disrupts development activities. In June, the final month of the fiscal year, contractors rush to complete work to receive their bills. Because of the rain, the quality of the work suffers. 

"This leads to waste of money as well as additional time being needed to implement projects. So the initiative to bring forward the fiscal year is positive," she said.

She said other sectors would also need to be adjusted if the fiscal year were changed.

"Although it may not be possible to make all the changes at once, they will have to be brought into line with the fiscal year gradually," she said.