FY27 budget unlikely to meet key targets: CPD

Bangladesh’s national budget for the 2026–27 financial year has been described as ambitious but potentially unstable by the Centre for Policy Dialogue (CPD), which has raised concerns over growth assumptions, revenue targets and the government’s ability to deliver planned spending.

In its Independent Review of Bangladesh’s Development (IRBD), presented at a budget dialogue in Dhaka’s Gulshan area, the Dhaka-based think tank said, “the fiscal framework appears optimistic but may struggle against weak implementation capacity and lower-than-expected economic momentum.”

The analysis, presented by CPD Executive Director Dr Fahmida Khatun, said the budget reflects a policy shift towards recovery through investment in human development, particularly in health and education. However, it warned that several macroeconomic projections lack a solid foundation.

The government has set a GDP growth target of 6.5% for FY2026–27, up from an estimated 5.0% in the revised FY26 budget.

Yet, CPD noted that provisional figures from the Bangladesh Bureau of Statistics suggest that actual growth in FY26 may have been closer to 4.14%, highlighting a wider gap between official targets and realised performance.

Revenue mobilisation has also been flagged as a key concern. The budget aims for an 18.2% rise in tax and non-tax revenue collection, reaching Tk 695,000 crore.

However, CPD estimates based on data up to March 2026 suggest actual revenue for FY26 could be nearer Tk 450,000 crore, implying that the required growth trajectory would need to be significantly higher than planned.

While the think tank acknowledged increased allocations to key social sectors, it pointed out that the health budget has risen by 124% and education by 42.7% compared with the revised FY26 figures.

Even so, CPD warned that both sectors continue to suffer from low spending efficiency, noting that the utilisation of health development funds has fallen sharply from about 80% in FY2015 to roughly 30% in FY2025.

Concerns were also raised over the Annual Development Programme (ADP), which has been set at Tk 300,000 crore, an increase of around 50% year-on-year.

CPD said that despite the large allocation, implementation remains weak, with only 35.4% of last year’s ADP spent in the first ten months.

The report further noted that none of the eight major infrastructure schemes scheduled for completion in FY27, including the Rooppur Nuclear Power Plant, are expected to be finished on time, raising questions over project management and execution capacity.

On taxation, CPD highlighted potential equity issues in the personal income tax structure, suggesting that lower-income earners are facing a relatively heavier burden compared with higher earners, particularly those earning above BDT 30 lakh annually.

In terms of social protection, the Social Safety Net Programme allocation has increased to Tk 14,400 crore, a rise of 13.9%.

However, CPD said that nearly 43.2% of this budget goes to pensions and agricultural subsidies, which do not strictly target the poorest households.

The think tank also questioned the government’s pledge to create one crore jobs within 18 months, noting that budget allocations for key employment-related ministries have either declined or remained largely unchanged as a share of total spending.

It pointed out a sharp reduction in the Ministry of Commerce allocation, which has fallen from Tk 909 crore to Tk 329 crore.

CPD further warned that the budget lacks a clear medium-term strategy to manage the economic risks associated with Bangladesh’s upcoming graduation from Least Developed Country (LDC) status, particularly regarding preference erosion in global markets.

“This budget is the first major opportunity for the new government to demonstrate its ability to drive economic recovery through sustained structural reforms,” Dr Fahmida Khatun said.

She added that success would depend heavily on execution, institutional strength and the ability to implement reforms effectively.

Overall, CPD’s assessment suggests that while the budget prioritises human development and long-term investment, its delivery will depend on whether Bangladesh can improve fiscal discipline, raise revenue efficiently and strengthen project implementation on the ground.