Bangladesh’s business leaders have welcomed the government’s proposed budget for the 2026-27 fiscal year as a market-friendly push towards deregulation and investment-led growth, but warned that ambitious economic targets could prove difficult to achieve without stronger institutions and effective implementation.
The Business Initiative Leading Development (BUILD), a prominent public-private policy platform, described the budget as one of the most reform-oriented in recent years, praising measures aimed at reducing red tape, easing tax burdens and accelerating the digitisation of public services.
In its initial assessment, BUILD said the government’s proposals signalled a clear intention to improve the business environment, stimulate private investment and create jobs as the economy seeks to recover from a period of slowing growth and persistent inflation.
The budget targets economic growth of 6.5 per cent in FY2026-27, a sharp rise from an estimated 3.49 per cent in the outgoing fiscal year. Inflation is expected to ease to 7.5 per cent from 9.2 per cent, while total expenditure is projected at Tk9.38 lakh crore, equivalent to 13.7 per cent of gross domestic product.
Despite welcoming the budget’s pro-business direction, BUILD cautioned that achieving those objectives would require overcoming significant structural challenges, including weak revenue mobilisation, banking sector vulnerabilities and heightened uncertainty in the global economy.
“Success will depend entirely on implementation,” the organisation said.
A major concern is the government’s revenue collection target of Tk6.95 lakh crore, which BUILD described as highly ambitious given longstanding weaknesses in tax administration. The group argued that broadening the tax base alone would not be enough without greater transparency, improved compliance and the effective rollout of the automated tax refund system proposed under the Finance Bill.
BUILD also questioned the introduction of a 0.2 per cent advance income tax on retailers, warning that the measure could ultimately raise costs for consumers and add to inflationary pressures at a time when households are already struggling with elevated living expenses.
The organisation further raised concerns over social protection spending. Although allocations for social safety programmes have increased by 25 per cent to Tk1.45 lakh crore, BUILD noted that more than a quarter of the funding has been allocated to pensions, raising questions about whether such payments should be counted within the social safety net budget.
On development spending, the government has allocated Tk3.16 lakh crore, including a Tk3 lakh crore Annual Development Programme. While BUILD welcomed the emphasis on infrastructure and growth-enhancing investment, it said chronic weaknesses in project execution across government agencies remained a significant obstacle.
The budget deficit is forecast at Tk2.43 lakh crore, equivalent to 3.6 per cent of GDP. The government plans to finance the shortfall through a mix of domestic and foreign borrowing, while reducing its reliance on the banking sector compared with the revised estimate for the current fiscal year.
However, BUILD warned that geopolitical tensions and volatility in global energy markets could make external financing more difficult, potentially forcing the government to depend more heavily on domestic borrowing.
The organisation welcomed a number of targeted tax reforms, including lower source tax rates on export incentives, freight forwarding services and electricity supplied by captive power producers. It also praised VAT reforms designed to reduce compliance costs, including longer filing deadlines and lower deposits required for VAT appeals.
Support for the digital economy and green industries received particular approval. VAT exemptions for freelancers and content creators, a new Free Trade Zone framework and substantial reductions in import duties on electric vehicles and related equipment were cited as positive steps towards improving competitiveness and supporting sustainable growth.
Nevertheless, BUILD stressed that tax incentives alone would not be enough to drive a successful low-carbon transition.
While business leaders broadly support the government’s reform agenda, they argue that the coming fiscal year will test Bangladesh’s ability to translate policy ambition into tangible economic outcomes. For investors, the key question is no longer what reforms have been announced, but whether they can be delivered.