Dhaka: Citizen's platform on Thursday urged the new government to immediately prepare a realistic revised budget for the current fiscal year and enforce a hard budget constraint to stabilise the economy amid mounting macroeconomic pressures. The recommendations came at a briefing held at BRAC Centre in Mohakhali, where Citizen's Platform presented its 'Macroeconomic Benchmark for the New Government'. The presentation was made by Towfiqul Islam Khan, Additional Director (Research) at CPD.
According to United News of Bangladesh, the platform highlighted three binding constraints: fragile macroeconomic stability, weakened private investment and employment, and diminishing fiscal space. It stressed that there should be 'no compromise' in formulating a realistic revised budget for FY2025, including updated projections on debt stress. The analysis indicated that Bangladesh is now in a position where recurrent operating expenditures cannot be met through domestic revenue mobilisation. In FY2025, revenue shortfall exceeded Tk 1 lakh crore, while foreign debt repayment rose sharply, further squeezing fiscal space.
The platform warned that public debt increased by Tk 2.6 lakh crore between end-June and end-September 2024, driven largely by domestic and external borrowing, alongside currency depreciation. Although the budget deficit remained below 5 percent of GDP, repayment capacity should now be the key concern rather than the debt-to-GDP ratio alone, it noted.
In response, the platform recommended adopting a 'miser approach' for the remainder of FY2025, prioritising public expenditure, cutting unnecessary operating costs, and refraining from allocating additional public funds to troubled banks. New public investment projects should be deprioritised, while ongoing and foreign loan-financed projects should receive priority.
On monetary policy, Citizen's Platform suggested that a small cut in the policy rate could support private investment, though it cautioned that non-food inflation remains sticky. It advised against aggressively building up foreign exchange reserves, which could add to money supply pressures. Despite improvements in foreign exchange reserves, reaching $28.9 billion in January 2026, and some stability in the exchange rate, inflation remains elevated at 8.7 percent, with non-food inflation above 9 percent.
Private investment fell to 22.5 percent of GDP in FY2025, while GDP growth slowed to 4 percent. In the first half of FY2025, about 21 lakh jobs were lost nationwide, and poverty is believed to have increased, the report said.
The platform critiqued selected election pledges as 'highly ambitious', urging a staggered approach to delivering manifesto pledges. It suggested initiating resource-intensive commitments from FY2027 and recalibrating some targets to ensure macroeconomic stability. As part of a realistic pathway forward, it proposed implementing an economic stabilisation plan with a hard budget constraint, preparing a credible fiscal framework for the next budget, convening a multi-stakeholder development forum, and rolling out a time-bound reform agenda, including an LDC transition strategy.
'Setting the course early on is crucial for success,' the presentation noted, underscoring that prudent macroeconomic management will significantly influence the government's ability to deliver on its electoral commitments.