In a curious turn of events, it seems that politicians and policymakers share a common approach in drafting budget documents, despite differing views from economists. The budget for the fiscal year 2026-2027 under the BNP government bears a striking resemblance to the budget presented by the former Awami League (AL) government for the fiscal year 2009-2010. Both budgets were unveiled following landslide election victories after interim administrations, with both placing blame on the preceding regimes and maintaining structural similarities.
During FY2009-2010, the AL government’s budget totaled nearly Tk 1.14 lakh crore, with a revenue target of Tk 74, resulting in a fiscal deficit of Tk 26. Comparatively, the BNP government’s budget for FY2026-2027 amounted to Tk 9.38 lakh crore, with a revenue target of 74 percent and a deficit of 26 percent. However, the financing strategy differed slightly. While the AL government aimed to secure Tk 18 from domestic sources and Tk 8 from foreign sources, the BNP government planned to raise Tk 14 domestically and the remaining Tk 12 from foreign sources.
Breaking down the budget allocations, in FY2009-2010, 71 percent was earmarked for current operational expenses, while in FY2026-2027, this figure stands at 66 percent. Notably, the BNP government allocated 34 percent of its budget towards development expenditure, compared to the 29 percent allocated by the AL government. It is a common trend for budget allocations to be optimistic, with governments often revising their figures later on. Development budgets typically see underutilization, while operational expenses tend to align more closely with their initial allocations, hinting at bureaucratic inefficiencies and political shortcomings.
The real test of governmental efficiency lies in revised budgets. The last revised budget during the AL regime, for FY2023-2024, saw expenditures of Tk 7.14 lakh crore, falling short of the proposed Tk 7.62 lakh crore. Revenue collection amounted to Tk 67 if scaled to Tk 100, leaving a fiscal deficit of Tk 33. Domestic sources contributed Tk 22, while foreign funds accounted for Tk 11. The distribution between operational costs and development spending followed a 64:36 ratio. Similarly, the upcoming budget under the BNP government maintains a 66:34 ratio, indicating no significant shift in budget structure.
In the aftermath of the pandemic, AL budgets increasingly relied on domestic borrowings, a trend the incoming budget seeks to reverse. Domestic borrowing constituted a substantial 22 percent of the revised FY2023-2024 budget, whereas in the FY2026-2027 budget, it stands at 14 percent. Foreign borrowing for the upcoming fiscal year is set at 12 percent, slightly higher than the 11 percent in the revised FY2023-2024 budget. Balancing borrowing sources is crucial, as foreign loans come with conditions that ensure optimal resource utilization.
While doubts linger over achieving the ambitious revenue collection target of Tk 6.95 lakh crore, given the deteriorating tax-GDP ratio post-Covid, aiming to cover 74 percent of the budget through revenue is commendable. The 34 percent allocation for developmental expenditures in the proposed budget, amidst fiscal challenges, credit constraints, slow growth, and salary adjustments, reflects a forward-looking approach by the government.
Despite positive structural aspects of the budget, some points remain misrepresented. Notably, the absence of commentary on recent trade agreements with the US in the external sector discussion is glaring. The finance minister’s concern over the depreciation of the taka since 2006, misinterpreted as a sign of discredit, overlooks the positive implications of currency devaluation on export competitiveness, import control, and remittance inflows, all beneficial for the balance of payments.
The budget speech asserting Bangladesh’s economic struggles over the past decade and a half may resonate politically, but such statements within a budget document may raise eyebrows. The significant rise in nominal per capita GDP from $490 in 2006 to $2,593 in 2024 contradicts the narrative of economic devastation, highlighting the country’s developmental strides. Prioritizing education and healthcare in the FY2026-2027 budget underscores a progressive approach that can enhance human capital and address unemployment challenges.
While the budget displays ambition and addresses various challenges in revenue collection and project implementation, it aligns with past budget trends. The government’s focus on education and healthcare signals a positive outlook for future growth.
