Institutional capacity is key issue for budget implementation 

The budget, like most budgets, is a mixed bag. There are some good aspects, but again, not every aspect can be positive. Moreover, it has been prepared at a very challenging time.

There are two goals. One is to re-establish macroeconomic stability, and the other is to increase growth, investment, and employment. The most important objective is to reduce the inflation rate. In these areas, several positive steps have been taken, while some necessary steps could not be taken.

One area of risk in the budget's fiscal framework is the revenue and expenditure structure. Many are talking about overall size. I do not see any major concern regarding the size itself. Whatever the size may be, implementation is the main issue.

One area of concern is the assumptions on which the growth projections have been based. 

For example, if we look at the Medium-Term Macroeconomic Policy Statement, certain assumptions have been made that raise questions. Take the revenue collection target. In the current fiscal year, revenue growth during the first nine months has been very low. Up to July–March, it was only 6.9%, and there is a shortfall of Tk1 lakh crore. This means that in the remaining three months, revenue growth would have to reach 84.6%.

How practical is that? The projection for the next fiscal year is even more ambitious. In FY27, revenue is projected to increase by 7.9% compared with the FY26 budgeted amount — not the revised estimate or the actual collection, but the original budget target. That may look reasonable on paper, but what actually materialises is another matter.

If the revenue collection target is not achieved, a conflict could emerge between monetary policy and fiscal policy. On the one hand, monetary policy is being used to reduce inflation. On the other hand, if the tax authorities fail to meet the revenue target, the government will have to rely more heavily on bank borrowing. If government borrowing from banks increases excessively, it will be difficult to reduce inflationary pressure.

So there is a clear implementation challenge.

Take exports, for example. During the first 10 months of FY26, export growth was actually negative — minus 2.02%. Yet a higher growth rate has been projected going forward. For FY27, export growth is projected at 7.9%. To achieve that target, there will need to be a significant acceleration in export performance.

There is another issue. As I mentioned regarding the medium-term fiscal framework, export growth stood at negative 2% during the first 10 months of FY26. Whether the target of 9% growth can be achieved in the remaining two months is also a valid question. So I would say that there is a gap between these projections and reality.

Projections should be based on reality. It is good to have higher aspirations, but what matters is the progress we are actually seeing over time. I gave two examples: revenue collection and export growth. Similarly, projections in other areas can also be reviewed. It is not that these projections must remain completely fixed. It is better to review them periodically and keep them within a dynamic process of adjustment.

The key issue here is institutional capacity. Whatever size the budget may be, if institutional capacity is lacking, firstly, the budget will not be fully implemented — even a smaller budget may not be implemented properly. 

Second, there is a great deal of inefficient expenditure. In other words, spending takes place that does not increase production, improve productivity, or create jobs and employment. The quality of expenditure, therefore, cannot be ensured. To improve that, stronger institutional capacity, accountability in public spending, and good governance are essential. These requirements apply to all the sectoral targets outlined in the budget, as well as to all the revenue measures that have been proposed.

The foundations have become fragile. Whether we look at the financial sector, the energy sector, or even the NBR, which is responsible for tax collection, the institutions are either fragile or have not been strengthened sufficiently. This is why this budget will be even more challenging to implement. Our level of ambition has increased significantly. But if those ambitions are to be realised, institutions must be strengthened.

These targets are expected to be achieved within a year. Therefore, the pace of institutional strengthening must increase substantially. While implementation is ongoing, the capacity of these institutions also needs to be expanded significantly. The speed of this process has to be much higher. Otherwise, difficulties will arise across the board.

Take sectoral allocations and reform programmes as examples. One aspect of the budget that many people will welcome is the significant increase in health-sector allocations. But the question is: does the health sector have the capacity to utilise those funds effectively?

That is precisely the issue. The health sector consistently records one of the lowest implementation rates each year. Yet we know how great the needs are — whether it is procuring measles vaccines for children, strengthening primary healthcare, or addressing other critical priorities. We also know that people who rely on public healthcare services still have to pay more than Tk75 out of their own pockets for every Tk100 spent on healthcare.

So public spending in this sector clearly needs to increase. However, we often see that the allocated funds cannot be fully utilised. Moreover, much of the spending goes toward constructing buildings or purchasing equipment. Meanwhile, there remains a shortage of doctors, nurses, medicines, and other essential services. As a result, the quality of healthcare services does not improve.

Two things have to be done simultaneously. The budget has to be increased, and institutions have to be strengthened. Simply increasing the budget does not automatically improve healthcare or education services. It does not necessarily bring about qualitative change. At the same time, keeping allocations at their current level is also not a solution. We have now reached a point where both tasks must be carried out in parallel.

Yes, the number of poor people is increasing, and for that reason our social safety net programmes need to be revised. On the one hand, allocations have been increased, and on the other, new initiatives — particularly the Family Card programme — have been introduced. Alongside the Family Card, however, the existing social protection programmes, which number around 95, also need to be restructured. Over time, these older programmes should be gradually integrated into the Family Card system.

The earlier allowances of Tk500 or Tk600 are no longer sufficient in today's context. Moreover, some individuals may be receiving benefits from multiple programmes at the same time. These programmes therefore need to be realigned. The beneficiary database must also be improved to minimise errors and ensure that assistance reaches those who genuinely need it. This would help reduce waste and improve the effectiveness of support.

In other words, social safety net programmes need to be streamlined. This is particularly important at a time of high inflation, when many poor households have limited employment opportunities and little scope to increase their incomes. As you mentioned, poverty is rising, and various studies have pointed to this trend. Under these circumstances, the government needs to provide more direct support to vulnerable and low-income populations.

Fahmida Khatun spoke with TBS Executive Editor Shakhawat Liton.