Upcoming budget follows previous govt’s framework, say economists

Criticising the absence of fresh thinking in the upcoming budget, economists at a Dhaka policy forum today (19 May) said the interim government is adopting its predecessor's fiscal framework with only minor tweaks.

"The fiscal framework for this budget remains essentially that of the previous regime. No major shift has taken place – only cosmetic adjustments," said economist Debapriya Bhattacharya at the discussion titled "Bangladesh Economy 2025–26: Policy Reforms and National Budget".

"This continuation is disappointing," he added at the event organised by the Citizen's Platform for SDGs, Bangladesh, with support from the Centre for Policy Dialogue (CPD).

Debapriya, a distinguished fellow at CPD, warned that the budget was being prepared amid a complex socioeconomic backdrop, yet the government had failed to reflect this reality.

We are witnessing insufficient openness in discussions around budget reforms. There has been no consultation beyond Dhaka, and even within Dhaka, the level of coordination is poor

Debapriya Bhattacharya, Distinguished Fellow at CPD

He noted that the 8th Five-Year Plan had been paused and no replacement strategy introduced. "We recommended a biannual plan to fill the gap. Without it, investment could stagnate."

Criticising the lack of inclusivity in the budget-making process, he said, "We are witnessing insufficient openness in discussions around budget reforms. There has been no consultation beyond Dhaka, and even within Dhaka, the level of coordination is poor. What little dialogue has taken place lacks transparency and effective communication. I'd sum it up as a crisis of cooperation, coordination, and clarity – which shouldn't have been the case."

Despite these concerns, he said the budget's success hinged on four factors: political dialogue, clarity on elections, commitment to judicial reform, and law and order.

BNP criticises budget foundations

BNP Standing Committee Member Amir Khasru Mahmud Chowdhury questioned the GDP figures underpinning the budget. "This budget merely extends the legacy of the previous authoritarian regime. It reflects little recognition of current economic realities."

Excessive regulatory control is suffocating businesses. Bangladesh imposes disproportionate oversight. This creates room for corruption. We must break the cycle of control and misuse

Amir Khasru Mahmud Chowdhury, BNP Standing Committee Member

However, Mohammed Abu Eusuf, executive director of Research and Policy Integration for Development, sees some promise. "Former advisers are now in power. We expect this budget to reflect some policy reforms. The emphasis on quality over size is a good sign."

Controversy over NBR split

On the decision to split the National Board of Revenue (NBR), Debapriya said the move lacked proper consultation and was too rushed. "Professional autonomy is being squeezed without dialogue. The balance of responsibility must be rethought."

Khasru agreed, saying, "We support the NBR split, but not in its current form. Tax policy should be guided by the government, not the bureaucracy."

Fragile economy, weak reform

Debapriya linked economic fragility to weak structural reform. "Politicians involved in past corruption have disappeared, business groups are inactive, and bureaucrats have regained dominance."

"Other reforms receive more attention than the economy. This imbalance is dangerous. Without economic stability, no other reform can succeed," he warned.

He also noted the absence of a medium-term plan. "This budget has no organic link with broader reforms. We've missed the chance for a coordinated push."

Concerns over inflation, jobs

While inflation has eased, Debapriya attributed it to exchange rate stability and supply-side management, not effective monetary policy.

Khasru warned of rising extreme poverty, especially among youth. "Investment incentives are weak, job growth is slow, and there are no signs of real recovery yet."

He also said excessive regulatory control is suffocating businesses. "Bangladesh imposes disproportionate oversight. This creates room for corruption. We must break the cycle of control and misuse."

Khasru criticised the interim government for failing to ensure a democratic transition. "There's no clarity about elections, tenure, or the country's direction. This uncertainty paralyses policy."

He called for political tolerance. "Even when we disagree, we must accept others' paths. Without political reform, economic reform is impossible."

Call for renewed confidence

Anisuzzaman Chowdhury, special assistant to the chief adviser, urged renewed confidence in Bangladesh's potential. He said the country must discard outdated labels like "basket case" and fight for a fair global economic order.

Zahid Hussain, former lead economist at the World Bank's Dhaka office, outlined key banking reforms. "Regulation has been tightened by reverting to the 2019 policy, reducing the NPL period from 270 to 90 days."

He added that flexible exit policies and bailouts for restructured loans are being introduced in consultation with lenders and borrowers. Data on ultimate bank ownership is also being collected.

On banking reforms, flexible exit policies and bailouts for restructured loans are being introduced in consultation with lenders and borrowers. Data on ultimate bank ownership is also being collected

Zahid Hussain, Former lead economist at the World Bank's Dhaka office

Asset quality reviews for distressed banks are underway. "Six reviews are complete but yet to be submitted. We expect a restructuring model before the interim government's term ends," he said.

He noted that an interagency task force is tracking illicit transfers and working with foreign partners to freeze assets and repatriate funds.

Reform roadmaps still missing

Selim Raihan, executive director of South Asian Network on Economic Modelling, expressed doubt over the effectiveness of recent reform papers. "No broad discussion has followed. We haven't seen an actionable roadmap. A dramatic shift in the next budget seems unlikely."

He blamed policy inertia for reform failures. "In documentation, we outperform many LDCs. In implementation, we lag. Those in power resist reform, while those without power demand it – and that mismatch is a serious concern."