The government has placed the restoration of macroeconomic stability at the centre of its economic recovery, restoration and reconstruction agenda, pledging a series of fiscal, monetary and institutional reforms aimed at curbing inflation, strengthening public finances and reducing debt dependence.
As per the budget document, the government acknowledged that persistently high inflation over the past several years has significantly eroded household purchasing power and weakened the country’s overall economic foundations.
Inflationary pressures have been driven not only by global factors but also by domestic challenges, including supply chain inefficiencies, market distortions, inadequate competition and various structural bottlenecks, it said.
To shield citizens from the impact of rising prices, the government said, it will focus on strengthening foreign exchange reserves, enhancing external sector resilience and ensuring greater stability in the foreign exchange market.
The document noted that Bangladesh’s import-dependent economy remains vulnerable to exchange rate fluctuations, with the depreciation of the Taka against major foreign currencies contributing significantly to domestic inflation.
The government also pledged to maintain close coordination between monetary and fiscal policies while ensuring adequate credit flows to productive sectors.
Efforts will be made to improve external balances through export growth, facilitation of remittance inflows and prudent management of non-essential imports.
Finance Ministry officials believe these measures, combined with improved expenditure efficiency and sound fiscal management, will help keep the budget deficit within sustainable limits, restore market confidence and create a more favourable environment for investment and production.
A major component of the government’s fiscal strategy is strengthening domestic resource mobilisation.
As part of an institutional reform initiative, the government has begun separating revenue policy formulation from revenue administration.
Under the new framework, tax policy will be developed through a dedicated system supported by professional expertise, evidence-based analysis and broad stakeholder consultations.
The government has also adopted a medium-term revenue strategy focused on broadening the tax base, improving compliance and enhancing transparency and efficiency in revenue administration.
Planned reforms include expanding the taxpayer base, digitising tax registration and return filing, strengthening monitoring systems, modernising VAT administration, improving withholding tax compliance and introducing risk-based audit mechanisms.
At the same time, taxpayer services will be expanded and procedures simplified to encourage voluntary compliance.
The budget also announced a comprehensive review of tax expenditures and exemptions to improve transparency, efficiency and accountability. Future tax incentives will be subject to stronger oversight and clearer justification.
According to the budget document, Bangladesh’s revenue-to-GDP ratio currently stands at around 8 percent, while the tax-to-GDP ratio is approximately 6.8 percent.
The government aims to raise these ratios to 11 percent and 9.6 percent, respectively, by fiscal year 2030-31 through a combination of policy and administrative reforms.
The budget document also highlighted growing concerns over public debt sustainability, attributing current pressures to large-scale borrowing undertaken for what it described as corruption-ridden and poorly planned “vanity projects” implemented during the previous regime.
The government said the resulting debt burden has placed considerable strain on the country’s fiscal position.
To address these challenges, the administration has set a target of improving Bangladesh’s debt risk rating from the current “moderate” category to a “low” risk category.
It plans to achieve this by enforcing stricter fiscal discipline, increasing revenue collection, maintaining sustainable budget deficits and modernising debt management practices.
The government further signalled a strategic shift away from what it termed a debt-driven growth model, emphasising the need to build a self-sustaining economy driven by production, employment generation and private sector investment.
“Policies will be pursued to systematically reduce debt dependence and promote investment-led growth as the foundation of sustainable economic progress,” the budget document stated.
