The Centre for Policy Dialogue (CPD) on Friday described the proposed national budget for fiscal year 2026-27 as an ambitious attempt to drive economic recovery through human development and private-sector-led growth, but cautioned that its success will depend more on the quality of execution than on its size.
CPD Executive Director Dr Fahmida Khatun presented the think tank's assessment of the FY27 budget at a city hotel in Gulshan, a day after Finance Minister Amir Khosru Mahmud Chowdhury presented the Tk 9.38 lakh crore budget – largest in the country's history – in Parliament under the theme “Journey Towards a Democratic, Humane and Inclusive Economy.”
“The underlying philosophy of the proposed FY27 budget appears to be one of economic recovery through human development, private sector-led growth, and social protection,” she said, noting that the budget also emphasises jobs, entrepreneurship, education, healthcare, and welfare, broadly aligning with the BNP government's election manifesto.
Macroeconomic Targets
CPD flagged that most key macroeconomic targets set in the budget appear overly optimistic, given the current economic reality.
The budget projects GDP growth of 6.5 percent in FY27, a significant recovery from the provisional estimate of 5.0 percent for the revised FY26.
However, CPD noted that the Bangladesh Bureau of Statistics (BBS) has estimated actual GDP growth for FY26 at just 4.14 percent, making the FY27 target a steep climb.
The inflation target of 7.5 percent for FY27 was also questioned. As of May 2026, the 12-month moving average inflation stood at 8.63 percent, already above the FY26 target of 7.0 percent.
CPD said achieving the FY27 target will require improved food supply, stable energy provision, and prudent monetary policy working in concert.
On private sector credit, the budget projects growth of 9.4 percent in FY27, while actual private sector credit growth as of April 2026 was only 4.75 percent.
The think tank called the target “possibly optimistic”, given the government's high reliance on bank borrowing and the economic slowdown.
It also noted that the exchange rate target of Tk 127.0 per US dollar for FY27 appears inconsistent with the interbank rate of Tk 122.75 as of June 4, 2026.
Revenue Mobilisation
CPD expressed concern over the budget's revenue mobilisation targets, projecting an 18.2 percent growth over the revised FY26 figures.
Based on actual revenue data up to March 2026, CPD's own projection suggests the actual FY26 revenue outturn could be significantly lower, meaning approximately an additional Tk 2,45,000 crore may need to be mobilised, a highly challenging task.
The National Board of Revenue (NBR) tax is projected to grow by 20.1 percent in FY27, accounting for 86.9 percent of incremental revenue, with VAT and income taxes set to lead the charge.
CPD said the budget deficit of 3.6 percent of GDP, higher than 3.3 percent in the revised FY26, will be financed through a combination of foreign loans (45.2 percent) and bank borrowing (46.1 percent), with bank borrowing remaining the dominant financing source.
ADP Implementation
The Annual Development Programme (ADP) for FY27 has been set at Tk 300,000 crore, 30.4 percent higher than the FY26 ADP and equivalent to 4.4 percent of GDP.
CPD termed this allocation “ambitious” in light of severe implementation underperformance: only 35.4 percent of the FY26 ADP was spent in the first 10 months of the year.
Education and health sectors received the largest incremental allocations, rising by Tk 21,034 crore and Tk 17,382 crore, respectively in the ADP.
The think tank called it “inspiring” that both sectors remain among the top five recipients, with health's ADP share jumping to 11.8 percent from 7.9 percent in FY26.
However, it raised a red flag on agriculture, whose ADP share fell to 3.6 percent from 4.7 percent, a development the organisation called “an alarming signal at a time when ensuring food security remains a high priority.”
On mega projects, CPD found that of 20 flagship infrastructure projects receiving Tk 58,747 crore, nearly 20 percent of total ADP, eight are scheduled for completion in FY27, yet the think tank concluded that “none of these will be completed by FY27” even under maximum resource utilisation.
The Rooppur Nuclear Power Plant has progressed to only 68.3 percent completion after nearly a decade, while MRT Line 1 stands at a mere 5.9 percent after six years of construction.
CPD also highlighted a troubling trend: the number of ADP projects carrying only a symbolic allocation of Tk 1 lakh or below has risen to 77 in FY27, up from 45 in FY26, indicating worsening tokenism in project listing. Meanwhile, 377 “carryover” projects remain in the pipeline, and 1,063 projects sit without any allocation whatsoever.
Taxpayers Relief
On fiscal measures, CPD said the personal income tax (PIT) structure remains unchanged for the current and next assessment years, with the tax-free threshold rising to Tk 3,75,000.
The think tank pointed out that while the threshold was raised from Tk 3.50 lakh to Tk 3.75 lakh, inflation-indexing will require it to be at least Tk 3.80 lakh, meaning low-income earners received no real purchasing power relief.
CPD welcomed the government's five-year PIT roadmap, including a threshold rise to Tk 4,00,000 for AY2028-29 and a new 35 percent top slab for incomes above Tk 35 lakh from FY29, as providing medium-term predictability.
However, it cautioned that the roadmap's thresholds need to more closely track inflation to ensure adequate income protection.
On corporate tax, CPD noted that Bangladesh's 27.5 percent rate for non-listed companies remains higher than regional competitors, including Vietnam (20 percent), Indonesia (22 percent), and India (22 percent under the concessional rate), potentially weakening the country's investment attractiveness.
Health Budget
The total health allocation has risen 50 percent in FY27 to Tk 62,852 crore, with the development component doubling to Tk 35,026 crore. The health budget's share of GDP has climbed to 0.92 percent in FY27 from 0.67 percent in FY26.
However, CPD raised concern over Bangladesh's out-of-pocket health spending, which at 79 percent of total health expenditure is the highest in South Asia and the seventh highest among 44 least developed countries.
Budget utilisation in health has also been declining, with the development component spending rate falling to just 30 percent in FY25 from 80 percent in FY15.
CPD recommended increasing corporate tax on tobacco manufacturers from the current 45 percent to 55 percent and the surcharge from 2.5 percent to 7.5 percent, calling the current tobacco tax structure inadequate in discouraging consumption.
LDC Graduation
The think tank identified two notable gaps in the budget's trade and external sector strategy. Unlike the previous year's budget, FY27 does not include a dedicated tariff rationalisation roadmap in view of Bangladesh's impending LDC graduation, which the government has formally requested to defer by at least three years.
CPD called it a “notable gap,” saying a clear roadmap to reduce anti-export bias and prepare industries for preference erosion should have been a priority.
On the US-Bangladesh Agreement on Reciprocal Trade (ART), it noted that no identifiable tariff changes linked to the agreement were included in the FY27 budget.
While calling this “possibly prudent” given the US Supreme Court's ruling that the underlying executive authority for reciprocal tariffs was not legally sanctioned, CPD called for clear government communication on how it intends to proceed with ART commitments, including a US$ 3.7 billion Boeing aircraft deal signed by Biman in April 2026.
Budget Execution
Wrapping up the presentation, CPD Executive Director Fahmida said the budget represents the new BNP government's first major opportunity to demonstrate its ability to drive economic recovery through sustained structural reform.
“Though the budget is much larger than previous ones, its success will ultimately depend less on its size than on its quality of execution,” she said. “This will require strong institutions that have the capacity to implement the budget efficiently and deliver tangible outcomes.”
CPD's analysis was part of its Independent Review of Bangladesh's Development (IRBD) programme, led by Dr Fahmida, alongside Distinguished Fellow Prof Mustafizur Rahman and Research Director Dr Khondaker Golam Moazzem.