Budget FY27 wins reform praise, faces execution and revenue doubts from business, development bodies

The proposed FY2026-27 national budget has drawn a broadly positive yet cautious response from development advocates and business bodies, with stakeholders welcoming its reform orientation, investment focus and green transition measures while repeatedly flagging implementation capacity and revenue mobilisation as key risks.

Development organisation ActionAid Bangladesh, jointly with the Just Energy Transition Network Bangladesh (JETnet-BD), issued one of the most strongly supportive reactions, describing the budget's tax and customs exemptions for renewable energy as a "milestone" for Bangladesh's just energy transition.

The organisation highlighted sweeping fiscal incentives for solar energy, battery storage and electric mobility, including zero customs duty and advance tax on solar components until 2031, a long-term 0% tax regime for solar power generation until 2035, and targeted rebates to encourage household and community-level solar adoption. 

It also welcomed exemptions for lithium-ion and sodium-ion battery manufacturing inputs, alongside reduced tax burdens for electric vehicles and charging infrastructure.

ActionAid Bangladesh said these measures could accelerate a shift away from imported fossil fuels, reduce climate vulnerability, and support a more decentralised and inclusive energy system. It further praised the proposed prioritisation of the energy sector among ten national focus areas and the increased allocation for power and energy development, calling it a strong foundation for achieving renewable energy targets in the coming decade.

In contrast, industry bodies focused more on macroeconomic stability and execution risks, while still endorsing the budget's reform agenda.

The Bangladesh Chamber of Industries (BCI) described the budget as "reform-oriented" and "business-friendly," commending its emphasis on banking sector reform, tax system improvements and public financial management restructuring. 

It also welcomed the identification of ten priority sectors, along with greater policy attention to the creative economy and blue economy, calling these strategic shifts important for long-term industrial diversification.

BCI also supported proposals aimed at reviving closed factories, expanding SME financing, and broadening the tax base, while endorsing deregulation measures intended to simplify business operations. 

However, it cautioned that implementation remains the central challenge, warning that Bangladesh's historical capacity constraints could limit the impact of otherwise well-designed reforms. The chamber stressed the need for clear timelines, stakeholder coordination and uninterrupted industrial energy supply to ensure effective execution.

Similarly, the Business Initiative Leading Development (BUILD) described the budget as "creative and innovative," signalling a shift in economic policymaking. It praised the focus on investment, employment generation and social protection, and welcomed reforms in taxation, customs and public financial management.

However, BUILD raised concerns over the feasibility of the government's revenue mobilisation targets, particularly in a context of persistent inflation, global uncertainty and sluggish investment. It also questioned the introduction of a 0.2% advance income tax at the retail level, warning that it could disproportionately affect lower-income consumers and add inflationary pressure.

The policy advocacy group additionally noted weaknesses in institutional capacity, particularly within the National Board of Revenue (NBR), arguing that ongoing modernisation initiatives such as e-filing, VAT automation and customs reforms have yet to deliver expected efficiency gains. 

While acknowledging positive measures such as VAT exemptions for freelancers and the introduction of a free trade zone framework, BUILD stressed that the budget's success will depend heavily on execution and financial stability.

The Metropolitan Chamber of Commerce and Industry, Bangladesh (Metropolitan Chamber of Commerce and Industry, Bangladesh) has welcomed the proposed FY2026–27 national budget, calling its focus on economic recovery, employment generation and social protection timely, while cautioning that its success will depend on implementation capacity and revenue realism.

In a statement issued today (12 June), MCCI congratulated Finance and Planning Minister Amir Khosru Mahmud Chowdhury for presenting the first budget of the newly elected government. It noted that the budget was prepared amid inflationary pressures, global uncertainty, sluggish investment and revenue mobilisation challenges.

The Tk9.38 lakh crore budget (13.73% of GDP) and Tk3 lakh crore ADP reflect an expansionary fiscal stance. MCCI said the 6.5% growth and 7.5% inflation targets signal efforts to stabilise the macroeconomy, and it endorsed the ten priority areas as appropriate for economic discipline and relief.

However, it termed the Tk6.95 lakh crore revenue target – including Tk6.04 lakh crore from the NBR – as overly ambitious, citing weak collection trends. It warned that aggressive tax mobilisation without structural reforms could raise pressure on taxpayers, increase prices, and risk inflationary spillovers.

MCCI urged expansion of the tax base, automation of tax administration, and improved public expenditure efficiency rather than higher burdens on existing taxpayers. It also highlighted weakening investment conditions, noting that total investment has fallen to a decade low of 27.93% of GDP.

The chamber welcomed tax reforms, digitalisation measures, and expanded social safety net allocations, but reiterated that effective implementation, governance reforms and a predictable tax environment will determine the budget's outcome.