Budget Lacks Clear Plan for Investment Growth: SANEM

Dr. Selim Raihan, Executive Director of the South Asian Network on Economic Modeling (SANEM), has voiced serious concerns about the newly proposed national budget for the fiscal year 2025-26, highlighting its failure to present a clear and effective roadmap for fostering an investment-friendly environment in Bangladesh.

In his immediate reaction to the budget announcement, Dr. Raihan acknowledged that while the budget contains some provisions aimed at boosting investment and employment, it falls short of delivering meaningful commitments or strategic policies to address the structural challenges holding back economic growth. He pointed out that critical areas such as tax reform, formalization of the economy, infrastructure development, and legal certainty have been overlooked or inadequately addressed, which could severely undermine investor confidence in the country’s economic prospects.

“The Financial Advisor’s budget speech clearly identifies the key challenges facing Bangladesh today — inflation, unemployment, stagnant investment flows, and rising inequality. The government has expressed a commitment to tackling these issues. However, beneath this strategic rhetoric lies a budget that largely repeats past approaches without addressing the deep-rooted structural weaknesses,” Dr. Raihan said.

He criticized the budget’s lack of focus on long-term solutions, stating that it follows the structure of the previous fiscal year with minimal emphasis on the reforms needed to tackle persistent economic problems. “Long-standing challenges such as weak revenue mobilisation, inefficient government expenditure, and significant delays in project implementation remain unchallenged. Without addressing these, the country’s development goals remain at risk.”

Dr. Raihan also noted that the budget only partially reflects the demands raised during the widespread student movements in July and August 2024, which called for greater social equity and more employment opportunities. “Although the budget mentions reducing inequality and boosting employment, these initiatives appear fragmented and limited in scope. Key social sectors such as education, healthcare, and social security continue to receive inadequate funding, and crucial institutional reforms to ensure effective and accountable spending in these areas are missing.”

Highlighting a major weakness, Dr. Raihan pointed out the absence of reforms aimed at improving the institutional capacity for implementing projects and policies. “The budget does not provide any clear direction to strengthen coordination between ministries, improve project planning and execution, or enhance transparency in public spending. As a result, the budget risks becoming merely a paper exercise focused on numerical targets rather than a tool for real structural change.”

He raised concerns over the political backdrop, questioning whether the interim government would be able to prioritise the country’s deepening economic crises amidst ongoing political uncertainties and the upcoming elections. “The government faces immense pressure due to political deadlock and election-related uncertainties. If urgent and sincere steps are not taken to tackle unemployment, revive investment, control inflation, and reduce inequality, public confidence in the government’s economic management will further erode.”

Dr. Raihan concluded with a call for more decisive action: “This budget should have been an opportunity to lay down a clear, actionable plan for economic recovery and growth. Instead, it leaves many questions unanswered about the government’s commitment to structural reforms and investment promotion.”