The forthcoming budget for the 2025-26 fiscal year will not be significantly expansive and will incorporate certain austerity measures, stated Finance Adviser Salehuddin Ahmed.
In an exclusive interview published on Tuesday (19 February) in the national daily Khaborer Kagoj, he discussed key economic issues including national economic challenges and prospects, international trade, fiscal policies, human resource development, and comparative development experiences.
In response to a query regarding the nature of the upcoming budget, Salehuddin Ahmed noted, “We are preparing a revised budget. Our primary objective is to enhance foreign exchange earnings by diversifying exports. Currently, our economy is heavily reliant on ready-made garment exports, which is not a sustainable long-term strategy.”
He identified the most pressing challenge as fuel subsidies, stating, “This year, Tk40,000 crore has already been allocated for subsidies, covering petroleum, fertilisers in agriculture, and other essentials. Fertiliser is provided to farmers at a much lower price than its actual procurement cost. While the budget will not be extensive, it will include elements of fiscal restraint. However, operational costs cannot be curtailed.”
The adviser further elaborated, “Salaries, allowances, and debt servicing costs cannot be reduced, necessitating a relatively conservative budget approach. Consequently, no large-scale mega projects will be initiated, as such undertakings typically require funding from both domestic and international development partners.”
One of the fundamental obstacles, he highlighted, is the lack of sufficient financial resources within the budget. “Our tax-to-GDP ratio stands at merely 7.7%, whereas Bhutan’s is 12%, Japan’s is between 21-22%, and Finland’s reaches 50%, where citizens enjoy extensive social benefits as a result.”
Drawing comparisons with developed nations, he observed, “In those countries, tax revenues finance extensive social welfare schemes, including free healthcare and pensions for the elderly. While we aspire to such a system, our revenue collection mechanisms remain underdeveloped. Additionally, accurate statistics on total tax revenues are not readily available.”
He pointed out that many taxpayers face difficulties navigating online tax submission procedures, prompting authorities to extend deadlines. “At present, 1.2 million individuals have filed their returns online, a substantial increase from last year, and this number is expected to rise further.”
However, online tax filing has not yet been made mandatory for corporations, as their tax compliance requires extensive documentation and licensing.
Speaking on the budgetary expansion, he stated, “We aim to broaden the budgetary net. Furthermore, major development agencies such as the Asian Development Bank and the World Bank have expressed their willingness to support ongoing large-scale projects. Our focus remains on ensuring the budget is pragmatic and implementable.”
He stressed the necessity of investment in infrastructure and the energy sector, noting that outdated pipelines and electrical grids require urgent replacement.
“The most pressing concern, however, is employment generation. Without stable employment, inflationary pressures will escalate further.”
Referring to overseas labour markets, he observed, “Over the past year, Malaysia, Dubai, Abu Dhabi, Qatar, and Oman have significantly reduced hiring Bangladeshi workers, with Saudi Arabia and Italy being the only notable exceptions. Many individuals are attempting illegal migration by sea, further exacerbating socio-economic risks.”
Highlighting the fiscal burden, Dr Salehuddin Ahmed stated, “Given the revenue constraints, austerity measures are essential. However, these cannot be applied to the social sector, a stance echoed by international development partners. Cutting Tk25,000 crore from the health sector may appear viable on paper, but in reality, it would result in hospital closures and a collapse of essential medical services.”
Similarly, he warned of adverse effects on education and information technology sectors if budgetary reductions were enforced.
“Past government expenditures have often been disproportionately channelled into the hands of a select few. Moving forward, we must ensure a more equitable allocation of resources.”
The interim government, he asserted, must balance fiscal discipline with socio-economic imperatives, ensuring that essential services remain unaffected while maximising revenue mobilisation efforts.
