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Public finance

Bangladesh's National Budget for 2025-26: Prioritizing Growth, Inclusion, and Fiscal Responsibility

Strategic Insights

— 2 min read

The proposed national budget for 2025-26 aims to balance economic growth, social welfare, and fiscal responsibility, with a total budget size of Taka 7.90 lakh crore and a revenue target of Taka 5.64 lakh crore. The budget allocates significant resources for education, health, and agriculture, while also addressing crucial elements and challenges impacting business growth and taxpayer compliance. However, concerns have been raised about the removal of tax exemptions, increased VAT on e-commerce, and pressure on the middle class.

Key Takeaways:

  • The budget allocates Taka 35,403 crore for primary and mass education, Taka 47,563 crore for secondary and higher education, and Taka 41,908 crore for health.
  • The proposed budget deficit is Taka 2.26 lakh crore, representing 3.60% of GDP, financed through domestic and foreign resources.
  • The government has proposed a reduction in withholding tax for construction and essential goods, and exempting dividends from joint ventures from taxable income.
  • The budget allocates Taka 39,620 crore for agriculture, and Taka 2.30 lakh crore for the Annual Development Programme (ADP).
  • The government plans to cover the budget deficit through Taka 1.25 lakh crore from domestic markets and Taka 1.01 lakh crore from international sources.
  • The budget aims to promote sustainable growth, infrastructure development, and job creation, while enhancing tax compliance and awareness.
  • The government proposes to address the low tax-GDP ratio, which hampers revenue generation, and to reduce reliance on donor funding and deficit financing.
  • The budget allocates resources for financial inclusion, digital access, and outreach initiatives, aiming to reach underserved communities and promote tax registration.
  • A robust taxpayer education strategy will be essential for improving tax compliance and facilitating socio-economic development.

Statistics:

  • Total Budget Size: Taka 7.90 lakh crore
  • Revenue Target: Taka 5.64 lakh crore
  • Budget Deficit: Taka 2.26 lakh crore
  • Annual Development Programme (ADP): Taka 2.30 lakh crore
  • Tax Revenue from National Board of Revenue (NBR): Taka 4.99 lakh crore
  • Tax Revenue from other means: Taka 65,000 crore
  • Increasing VAT on e-commerce from 5% to 15%
  • Poverty rate increase across various districts between 2022 and 2024: (not specified)
  • Slowed GDP growth for FY25: (not specified)

Sources:

  • "Proposed National Budget for 2025-26" by Prof. Dr. Muhammad Mahboob Ali
  • "Bangladesh's Economic Challenges" by Prof. Dr. Muhammad Mahboob Ali
  • "Inflation and Interest Rates" by Prof. Dr. Muhammad Mahboob Ali
  • "Low Tax-GDP Ratio" by Prof. Dr. Muhammad Mahboob Ali
  • "Poverty Rate Increase" by Bangladesh Institute of Development Studies (BIDS)
  • "Slowed GDP Growth" by The World Bank
  • "Tax Revenue from NBR" by The Bangladesh Government
  • "Annual Development Programme" by The Bangladesh Government
  • "Proposed National Budget Presentation" by Finance Adviser Dr. Salehuddin Ahmed

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