BowerGroupAsia prepared an update for clients on the latest budget in Bangladesh for fiscal year 2026-2027.

Context:

  • Bangladesh Finance Minister Amir Khasru Mahmud Chowdhury presented the budget for fiscal year 2026-2027 June 11 totaling BDT 9.4 trillion ($76.6 billion). The revenue target was set at BDT 7 trillion ($57 billion), while the expenditure estimate was proposed at BDT 9.5 trillion with a deficit of BDT 2.4 trillion ($19.6 billion), which would be met from domestic and foreign borrowing and grants. This first budget of the Bangladesh Nationalist Party (BNP) government under Prime Minister Tarique Rahman was introduced to Parliament amid high expectations of equity, justice and economic opportunities.
  • Apart from its large size, this budget has been characterized as partly populist, reformist and ambitious in the context of the fragile economy and poor governance. It seeks to increase allocations for health, education and social safety nets and proposes several reforms to improve the business climate and encourage investment. Nevertheless, some of its assumptions seem unrealistic given the country’s current 9 percent inflation rate, and it contains many implementation risks.

Significance:

  • The government aims to implement its “3R strategy” of recovery and stabilization, restoration and reconstruction for acceleration in three stages. The first involves economic recovery, which will be implemented within one year. The current budget falls under this framework. The restoration program will be implemented over one to three years. The third phase consists of economic reconstruction programs, which will be implemented over five years to achieve 8.5 percent economic growth by 2030-2031.
  • The budget is built around 10 strategic priorities aligned with the strategy and with the BNP’s election manifesto. They include inclusive development, quality health care, education, universal social protections, investment-driven economy, employment and production, a simplified business environment, financial sector stability, energy security, digital transformation and information and communications technology development, management of life, nature, environment and water resources and transparent, efficient and accountable institutions and administrative systems.

Implications:

  • The budget proposal prioritizes improving the business climate and attracting private investment. The budget proposes to establish free trade zones, with duty free import facilities for export-oriented manufacturers, and to remove the 49 percent cap on foreign ownership in private docks and inland container depots which would attract foreign investment in logistics infrastructure. Reforms such as issuance of business licenses within seven days, completion of company registration within 18 hours, granting of work permits for foreign workers within seven days and issuance of visas for investors within 10 days will facilitate business.
  • Companies can expect growth in several sectors including electronics, semiconductors, electric vehicles, batteries, solar energy, shipbuilding and pharmaceuticals. Activities in these sectors will benefit from reduced tax and duty facilities. U.S. companies can expect new investment opportunities in the wake of Bangladesh’s Agreement on Reciprocal Trade by taking advantage of the country’s new economic growth areas.

We will continue to keep you updated on developments in Bangladesh as they occur. If you have any comments or questions, please contact BGA Head of Research Murray Hiebert at mhiebert@bowergroupasia.com.

Best regards,
BowerGroupAsia

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Head of Research

Murray is a top Asia expert and skilled researcher with three decades of experience living and working in Asia. His networks in business, media and government circles are deep and wide-ranging. He is also a senior associate of the Southeast Asia Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Earlier he served as deputy director of the program for six years. Prior to joining CSIS, Murray served for five years as senior director for Southeast Asia at the U.S. Chamber of Commerce where he worked with leading American companies, the U.S. government and Southeast Asian ... Read More