Budget missed window for 'bold trade reforms' ahead of LDC graduation: PRI chair

Bangladesh's latest national budget has missed a critical opportunity to introduce bold trade reforms ahead of its graduation from least developed country (LDC) status in 2026, according to Zaidi Sattar, chairman of Policy Research Institute of Bangladesh (PRI).

"No bold trade policy reforms were introduced, missing a critical opportunity to address the challenges of Bangladesh's upcoming LDC graduation in November 2026 and the USTR's reciprocal tariff demands," he said during an event, titled "Monthly Macroeconomic Insights – A Post-Budget Analysis" today (26 June).

"The budget includes only marginal para-tariff reductions, which are unlikely to drive export diversification. Given the mounting external pressures, strategic and urgent trade reforms are essential. Aligning with USTR requirements could catalyse broader modernisation of trade policy," he added.

Sattar further said Bangladesh must focus on expanding its revenue base while gradually reducing dependence on trade-based taxes.

Ashikur Rahman, principal economist at PRI, described Bangladesh's growing fiscal stress as the "Achilles' heel" of its macroeconomic management.

He said, "The situation has deteriorated to the extent that the Treasury is now compelled to borrow simply to meet recurring obligations – including public sector wages, rising subsidies, and growing interest payments. This acute lack of fiscal space is paralysing the Government's ability to address urgent priorities like recapitalising fragile banks with high levels of non-performing loans."

He added that the fiscal strain is not only compromising financial stability but also weakening the economy's overall resilience.

Sheik Moinuddin, special assistant to the chief adviser, Ministry of Road Transport and Bridges, emphasised on long-term planning, saying, "We need a comprehensive infrastructure plan that addresses our existing assets and future needs. But ultimately, the goal is sustainable economic development. A well-coordinated plan will allow all stakeholders to work together under a unified framework."

Australian Deputy Head of Mission to Bangladesh Clinton Pobke was present as the special guest and reiterated Australia's ongoing support to Bangladesh's economic development. 

"Partnerships built on sound policy dialogue are central to inclusive and resilient growth. Initiatives like PRI's MMI are vital for informed discourse," he said.

The event, organised by The Centre for Macroeconomic Analysis of the PRI in partnership with the Department of Foreign Affairs and Trade of the Australian Government, brought together top economists, diplomats, policymakers, and business leaders to assess the fiscal implications of the FY26 budget.