The increased borrowing from the banking sector could cause a “crowding out” effect, reducing the availability of funds for private sector investors, fears the Metropolitan Chamber of Commerce and Industries (MCCI).
Giving reaction on the budget, MCCI said borrowing from the central bank could increase inflationary pressure, affecting consumers or the public. Therefore, MCCI stresses the need for a proper balance between these two options. Additionally, there should be a provision for restructuring the banking sector to ensure strategic financial management.
This is to mention that the government has set a borrowing target of Tk 104,000 crore from the banking system, which is 5.05% higher than the revised budget for FY 2024–2025 (BDT 99,000 crore).
In its written reaction, released on Tuesday, MCCI congratulated Dr. Salehuddin Ahmed, Adviser, Ministry of Finance, for presenting the 54th national budget of the country for the fiscal year 2025-2026. MCCI believes that preparing the budget was a bold undertaking for the Hon’ble Finance Adviser in the face of several challenges, including shrinking export markets due to rising inflation, sluggish investment trends, high bank lending rates, ongoing global conflicts, and the upcoming transition to developing country status in 2026.
The proposed budget for the fiscal year 2025-2026 amounts to BDT 790,000 crore (12.7% of GDP), which is approximately 0.88% lower than the original budget for the current fiscal year (BDT 797,000 crore) but 6.18% higher than the revised budget (BDT 744,000 crore).
This allocation is expected to foster economic vitality, with the interim administration allocating BDT 230,000 crore to the Annual Development Programme (ADP) for the next fiscal year. The proposed budget sets the GDP growth target at 6.50%, indicating a positive outlook for the economy.
The revenue collection target in the proposed budget is set at BDT 564,000 crore, which is 8.88% higher than the revised target for the current fiscal year (BDT 518,000 crore). Of this amount, the National Board of Revenue (NBR) is expected to collect BDT 499,000 crore, while the remaining BDT 65,000 crore is to be collected from non-NBR sources.
MCCI has consistently advocated for meaningful structural reforms in tax administration to enable efficient revenue collection. MCCI strongly urges a resolution to increase the tax burden on regular taxpayers by raising tax rates. Broadening the tax net is crucial to resolving this matter effectively.
The budget for the fiscal year 2025–2026 has projected a deficit of BDT 226,000 crore (which is 3.62% of GDP). Out of the total deficit, BDT 101,000 crore will be sourced from external financing, while BDT 125,000 crore will be mobilized from domestic sources. Of this domestic financing, BDT 104,000 crore will come from the banking sector and BDT 21,000 crore from savings instruments and other non-bank financial institutions.
MCCI expresses its concern about the current investment climate. Investment has dropped to its lowest in the past 10 years (29.38% of GDP in FY 2024–2025), with both public and private investment on the decline.
