The Centre for Policy Dialogue (CPD) on Friday said the proposed FY2026–27 budget, though ambitious in targeting higher growth and inclusive development, lacks the institutional capacity and realistic foundations required for effective implementation.
The independent think tank noted that many of the budget’s projections appear inconsistent with prevailing economic realities, raising concerns about their credibility.
Speaking at a post-budget media briefing at a city hotel, CPD Distinguished Fellow Dr Mustafizur Rahman said that while the government has proposed several welfare-oriented measures—such as duty relief and expanded social protection—the absence of good governance and implementation capacity could emerge as major risks.
Weak foundations, unrealistic assumptions
Dr Rahman said the macroeconomic assumptions underpinning the budget are not grounded in reality. He pointed out that the projections rely on a sharp turnaround in key indicators—exports, revenue mobilisation and private sector credit—within the closing months of the current fiscal year.
“For instance, export growth is currently negative at 1.8 percent, yet the budget sets a target of 8.7 percent growth next year,” he said, adding that such projections reflect a lack of fiscal discipline.
He cautioned that basing the budget on weak and unrealistic assumptions could undermine its overall credibility.
Revenue target and debt risks
The CPD also questioned the feasibility of the revenue target, which aims to mobilise nearly Tk 5.88 lakh crore in additional resources. Achieving this would require revenue growth of around 25 to 30 percent within a single year.
“This is highly challenging,” Dr Rahman said, warning that any shortfall in revenue, coupled with unchanged public expenditure, would increase dependence on both domestic and external borrowing.
He further noted that the large external borrowing target and rising repayment obligations could create additional pressure on the macroeconomy.
Institutional reform crucial
The economist stressed that investment cannot be stimulated through tax incentives alone. Ensuring uninterrupted gas and electricity supply remains more critical than policy facilitation measures such as single-window services, he said.
Although the budget proposes higher allocations for health and education, CPD observed that it lacks clear direction on strengthening institutional capacity to ensure effective utilisation of these funds.
SMEs and employment
The think tank acknowledged positive measures for small and medium enterprises (SMEs), including bond facilities and bank guarantees. However, it said these initiatives would require targeted institutional support to deliver benefits at the grassroots level.
On employment, Dr Rahman emphasised the need to focus not only on the domestic market but also on developing skilled manpower for overseas employment, which could help strengthen remittance inflows.
Economy facing multiple challenges
CPD Executive Director Fahmida Khatun said the proposed budget is the first by the new government and comes at a time when the economy is facing multiple challenges, including persistently high inflation over the past four years, sluggish growth, weak private investment, limited job creation, revenue shortfalls, and vulnerabilities in the banking sector.
She noted that foreign exchange reserves have stabilised somewhat after being under pressure, but the energy crisis has now become a critical issue.
According to CPD, the budget’s underlying philosophy focuses on human development, private sector-led growth and social protection to support economic recovery. It also places importance on employment, entrepreneurship, education, healthcare and welfare.
The organisation observed that these priorities are broadly aligned with key political commitments, particularly in areas such as job creation, investment promotion, business-friendly policies and social sector development.
Implementation remains key
However, CPD stressed that the success of the budget will depend not on its size or ambition, but on its implementation.
It underscored the need for stronger coordination among ministries, improved governance and greater accountability to ensure that budgetary measures translate into tangible benefits for citizens.
“Strong and effective institutions are essential for implementing the budget and delivering visible outcomes,” Khatun said.
Drawing on past experience, CPD warned that ambitious targets often fail to yield expected results due to weak execution.
It described the FY27 budget as a critical test for the government to demonstrate its ability to advance economic recovery, boost investment, create jobs and carry forward long-term structural reforms.
“If properly implemented, the budget can help move the economy towards a more sustainable and inclusive growth path,” the CPD observed.