Economists may have differing opinions, but there is a noticeable similarity in how politicians and bureaucrats approach budget formulation. The budget for fiscal year 2026-27 by the BNP government bears a striking resemblance to the budget presented by the former Awami League (AL) government for fiscal year 2009-10. Both budgets were the first after their respective landslide election victories following interim administrations. They both attributed blame to the previous regimes before the interim period and share structural similarities.
In fiscal year 2009-10, the AL government’s budget totaled nearly Tk 1.14 lakh crore. If the entire budget is considered as Tk 100, the revenue target was Tk 74, leaving a fiscal deficit of Tk 26. The BNP government’s budget for fiscal year 2026-27 amounted to Tk 9.38 lakh crore, with a revenue target of 74 percent and a deficit of 26 percent. The financing breakdown differs slightly, with the AL government planning to raise Tk 18 domestically and Tk 8 from foreign sources, while the BNP government plans to collect Tk 14 domestically and the remaining Tk 12 from foreign sources.
Analyzing the budgets further, the fiscal year 2009-10 budget allocated 71 percent to current operational expenses, while the fiscal year 2026-27 budget allocates 66 percent to the same. Notably, the BNP government has earmarked 34 percent of its budget for development expenditure, compared to the 29 percent allocated by the AL government. Budget allocations often paint an optimistic picture, but governments tend to revise their numbers later. Development budgets are typically underutilized, highlighting bureaucratic inefficiency and political shortcomings.
Revised budgets serve as true indicators of a government’s efficiency. In the last revised budget of the AL regime for fiscal year 2023-24, expenditures amounted to Tk 7.14 lakh crore, falling short of the proposed Tk 7.62 lakh crore. Revenue collection stood at Tk 67, with a fiscal deficit of Tk 33. The distribution between operational costs and development spending followed a 64:36 ratio. The upcoming budget by the BNP government maintains a 66:34 ratio, showing no significant change in budget structure.
During the post-pandemic years under the AL regime, budgets increasingly relied on domestic borrowing. The new budget aims to reverse this trend, with domestic borrowing comprising 22 percent of the revised fiscal year 2023-24 budget, compared to 14 percent in the fiscal year 2026-27 budget. Foreign borrowing remains at 12 percent in the upcoming budget, similar to the revised fiscal year 2023-24 budget. Striking a balance between borrowing sources is crucial, as foreign loans come with rules and guidelines for resource utilization.
While critics doubt the feasibility of collecting Tk 6.95 lakh crore due to declining tax-GDP ratios, the government’s revenue target of covering 74 percent of the budget is commendable. The budget’s ambitious nature, with a significant allocation for development amid fiscal challenges, reflects the government’s forward-thinking approach.
Despite positive aspects, the budget overlooks key points, such as the recent trade deal with the US in the external sector discussion. The finance minister’s concerns about the taka’s depreciation since 2006 fail to acknowledge its benefits for export competitiveness and balance of payments stability. The rise in per capita GDP from $490 in 2006 to $2,593 in 2024 contradicts claims of economic devastation in the budget speech.
The focus on education and health in the fiscal year 2026-27 budget stands out, emphasizing quality education encompassing various aspects for societal growth. This strategic approach not only enhances human resources quality but also addresses unemployment, a root cause of social issues.
While the budget faces challenges in revenue collection and project implementation, its ambitious targets align with past budget trends. It sets a positive tone for the new government, maintaining proportionate targets compared to previous years.