Govt must unveil clear reform roadmap, confidence-building budget: Economists

Economists and business leaders have urged the government to unveil a clear economic reform roadmap alongside the upcoming national budget, saying Bangladesh is facing a structural economic challenge that requires coordinated policy action rather than isolated fiscal measures.

Speaking at a roundtable titled "Budget in Times of Crisis and Public Expectations", organised by the daily Prothom Alo in Dhaka today, the speakers said the next budget must prioritise macroeconomic stability, investor confidence, employment generation and support for businesses struggling with high costs, weak investment and financial-sector stress.

Finance and Planning Minister Amir Khosru Mahmud Chowdhury attended the discussion as the chief guest alongside economists, bankers, researchers and business leaders.

Debapriya Bhattacharya, a distinguished fellow of the Centre for Policy Dialogue, described the upcoming budget as a "balancing act" between difficult macroeconomic realities and rising public expectations from a newly elected government.

"On one side, there is pressure from inflation, debt management, IMF commitments and external financing constraints. On the other hand, there are strong political and public expectations," he said.

Debapriya argued that the government should present a strategic economic policy paper alongside the budget to explain its broader reform direction and improve policy credibility.

"A budget cannot succeed through isolated measures alone. It has to communicate the government's economic vision," he said.

He identified inflation as the most critical "anchor of stabilisation," saying food security, living costs and social stability are directly linked to price pressures.

The economist proposed keeping the budget deficit within 4% of GDP and stressed stronger coordination between revenue collection, expenditure management and development spending.

He also called for expanding the tax net instead of raising tax rates, reassessing tax exemptions worth nearly 6% of GDP and reviewing subsidies in the energy and power sectors.

Debapriya further advocated deregulation, liberalisation and efficiency gains to support growth at a time of limited fiscal resources. 

He also supported introducing wealth and inheritance taxes and suggested offloading shares of profitable state-owned and multinational companies in the stock market to deepen the capital market and raise revenue.

Economist Hossain Zillur Rahman said the government should prioritise a "successful budget" over a "popular budget," warning that the country is facing a deep confidence crisis among investors and ordinary citizens alike.

"We want to see the finance minister successful rather than merely popular," he said.

According to him, public expectations now centre on a "comfort-oriented budget" rather than an overly ambitious one.

Hossain Zillur also emphasised the need for new growth drivers beyond the services sector, identifying agriculture as a potential future engine of growth.

Selim Jahan, a professorial fellow at BRAC Institute of Governance and Development, said reforms must be designed in a way that people can absorb without damaging living standards.

"The budget balance should not destroy the balance of life," he said, cautioning against abrupt subsidy cuts that could worsen living conditions.

Masrur Riaz, chairman of Policy Exchange Bangladesh, said Bangladesh now urgently needs a structural reform roadmap as investment activity has become stagnant and growth in the manufacturing sector has weakened.

Businesses seek relief, competitiveness

Business leaders highlighted mounting pressure from high interest rates, tax burdens, energy shortages and weak investment conditions.

Mahbub ur Rahman, chief executive officer of HSBC Bangladesh, said Bangladesh must increase foreign currency inflows through offshore banking, export diversification and stronger ties with Middle Eastern investors. "Without export diversification, Bangladesh's external sector will remain vulnerable."

He also warned that weak sovereign ratings and deteriorating financial reporting standards are increasing the cost of imports and undermining investor confidence.

Simin Rahman, chief executive officer of Transcom Group, urged the government to reduce advance income tax on pharmaceutical raw material imports from 5% to 3% and lower the tax deducted at source on institutional sales.

She also stressed the need to broaden the tax base and modernise tax administration through digital and automated systems.

Mohammad Hatem, president of Bangladesh Knitwear Manufacturers and Exporters Association, said many factories are on the verge of closure and called for a special fund to support struggling businesses as well as a mechanism for "safe business exit" for entrepreneurs unable to continue operations.

He also criticised the existing tax structure, saying businesses are forced to pay advance taxes even when they are not making profits.

Mohammad Mostafa Hayder, director of TK Group, said Bangladesh is losing competitiveness to China, Vietnam and India because of significantly higher interest rates and shorter loan repayment periods.

"Manufacturers in Bangladesh are already struggling with high borrowing costs, gas shortages and expensive electricity," he said.

Meanwhile, Imran Hassan of the Bangladesh Restaurant Owners Association alleged that aggressive expansion by large corporate groups is threatening the survival of small restaurant and bakery businesses and called for policies to protect small entrepreneurs.

Govt prioritising stabilisation through reforms

The finance minister said the government inherited an economy burdened by structural weaknesses, fragile banks and underperforming industries, while global geopolitical tensions have intensified external pressures.

"We are passing through a challenging period, but this is also an opportunity to bring long-needed reforms," he said.

Khosru said the government is focusing on economic stabilisation through structural reforms, financial-sector restructuring and expansion of the tax net rather than increasing tax rates.

He acknowledged that many businesses have become undercapitalised because of currency depreciation and prolonged banking-sector weaknesses, which reduced working capital and constrained investment and employment generation.

The finance minister also emphasised the need for financing innovation as global borrowing costs rise and concessional financing becomes less accessible.

He reiterated the government's focus on export diversification, capital-market development and business-friendly deregulation to attract both domestic and foreign investment.

Khosru further said the government aims to simplify tax compliance through technology-driven reforms and gradually increase the country's tax-to-GDP ratio to 9%.