Published: 01:01 AM, 14 June 2026
Proposed Budget for 2026-27 Fiscal Year Seems Investment Friendly
Finance Minister Amir Khosru Mahmud Chowdhury has submitted the proposed budget for the 2026–27 fiscal year in the National Parliament. He has identified 10 priority areas, including development, education, healthcare, social protection, investment, energy, information technology and environmental management.
This is a record BDT 9.38 trillion budget, with a revenue target of BDT 6.95 trillion and a deficit of BDT 2.43 trillion to be financed through domestic and external borrowing.
The proposed FY27 spending plan sets a revenue target of BDT 6.95 trillion, of which BDT 6.04 trillion is to be collected by the National Board of Revenue (NBR) and BDT 910 billion from other sources. There is no proposal to reform NBR although all the stakeholders advocate for reform of NBR.
The deficit, proposed to be equivalent to 3.6 percent of gross domestic product, will be financed through BDT 1.27 trillion in domestic borrowing and BDT 1.16 trillion from external sources. Bank borrowing is projected at BDT 1.12 trillion, BDT 60 billion lower than the current year’s target.
The budget has set a target to contain inflation at 7.5 per cent in the next fiscal year (FY27) and raise GDP growth to 6.5 per cent in the upcoming fiscal year as curbing high inflation remains the most urgent macroeconomic challenge before the nation.
The budget seems business friendly to some extent as there are some reforms that have been proposed to enhance the business environment. Under the budget proposals, Tk400 crore has been set aside for startup capital, women's development, women's entrepreneurship, and young entrepreneur development under the ICT sector.
The Government is taking up an action plan for the 'One Village, One Product' initiative. Under the initiative, a range of products linked to the creative economy are being identified, including handloom products, pottery, weaving crafts, shital pati, shataranji, wooden toys, handmade jewellery and terracotta items. An allocation of Tk300 crore has been earmarked for the creative economy to develop the country's arts and culture-based industries. Tk2,000 crore has also been proposed as direct financial support for small and medium industries, alongside Tk17,000 crore in working capital loans to expand economic activity.
The FM also outlined a set of taxpayer-friendly reforms accompanying the budget, including simplifying corporate tax compliance, enabling online income tax return filing and payment, reducing regulatory burden on businesses, expanding allowable business expenditures, and scrapping provisions that disallow costs when withholding tax is not deducted. He added that the process of selecting tax cases for audit and withholding tax verification would be made fully transparent and automated. The propsed reforms are subject to various rules and regulations issued by NBR to implement this change in policies. Business community will carefully observe the subsequent rules and regulations.
FM proposed cutting withholding tax on 60 essential commodities to a uniform 0.5 percent in the 2026–27 budget, a move that was in line with an election pledge to bring relief after years of sharp price rises. The measure covers staple foods and agricultural goods including rice, wheat, potatoes, cattle, poultry, fish, onions, garlic, ginger, salt, sugar, edible oil and seeds. It would replace existing rates of 5 percent, 2 percent and 1 percent currently applied across different categories.
The government has given special attention to the jewellery industry and proposes to implement a series of measures to modernize the country’s jewellery industry and diversify export products by easing access to duty-free raw materials for export-oriented manufacturers. A new notification would be issued under the bonded warehouse system allowing duty-free import of raw materials for jewellery production and the subsequent export of finished jewellery in a transparent, orderly and compliant manner, according to a BSS report.
To further expand export-oriented industries and diversify the country’s export basket, FM proposed allowing 10 new sectors to import raw materials against bank guarantees without requiring a bond licence. The mandatory value addition of 30 per cent will not exist from this year for exporting products manufactured from duty-free imported raw materials brought in against bank guarantees without a bond licence.
The government aims to double the rate of goods clearance under the System-Based Self-Assessment process for Authorized Economic Operator (AEO) enterprises. This will ease the doing business and reduce the cost of doing business.
The laboratory test of imported goods at custom point is a major bottleneck in import of various materials. To verify the quality and conformity of imported goods, customs authorities will be permitted to use not only government laboratories but also Bangladesh Accreditation Board-accredited private laboratories recognized under ISO standards.
The government also proposed extending the customs duty exemption on chemicals imported by export-oriented factories for operating effluent treatment plants (ETPs) until June 30, 2027.
Human resources is another precondition for the development of the economy. While presenting the national budget, the government announced a proposed allocation for the education sector of 2 percent of GDP in the upcoming fiscal year, with a total allocation of Tk 1,366.06 billion (1 lakh 36 thousand and 606 crore). In the fiscal year 2025–26, the allocation for the education sector was Tk 872.06 billion (87 thousand and 206 crore), equivalent to 1.39 per cent of GDP. Although the proposed allocation increases to 2% of GDP, Bangladesh remains well below UNESCO’s 4-6% benchmark and lags several regional peers.
Additionally, the government has proposed a broad reform agenda that includes the gradual introduction of technical education from Grade 6, mandatory third-language instruction alongside Bangla and English, expansion of free undergraduate education for female students, and the "One Teacher, One Tab" digital learning programme.
The reforms in the education sector would also include AI-enabled learning initiatives, multimedia classrooms, expanded free Wi-Fi access, nationwide mid-day meals, and greater emphasis on sports, culture and co-curricular activities.
Despite the government's emphasis on building a skills-based economy, Technical and Vocational Education and Training (TVET) has been allocated Tk12,678 crore, equivalent to 9.2% of the total education budget. Experts say the relatively modest allocation raises questions about whether funding levels match ambitions to expand technical education and meet labour market demands.
An increase of this size is a positive development and reflects a commitment to increasing investment in education. Further improving educational quality requires investment not only in infrastructure but is not sufficient. We also need curriculum reform, textbooks, teacher development, sports, culture, technology, and robust planning and monitoring systems.
The proposed budget projected an investment-friendly policy through measures such as extended tax exemptions and reduced taxes across various sectors, aiming to boost the economy. The exemption primarily focused on commodities considering the inflation but we need a similar exemption on import of raw materials for a bust in the economy and employment generation.
Despite repeated calls from the business community to lower corporate taxes, the government has kept corporate tax rates unchanged in the proposed budget for fiscal year 2026-27.
Overall, the proposed budget reflects a positive sign of the deregulation agenda of the Government, which we welcome and appreciate very much. This is a generally positive signal to both local and foreign investors.
M. S. Siddiqui is CEO, Bangla Chemical
and a legal economist. He can be reached
