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Assessing The Implications of National Budget FY 2025-26 For Capital Market
Assessing The Implications of National Budget FY 2025-26 For Capital Market
Bangladesh’s National Budget for FY2025-26 is BDT 7.90 trillion, 7% higher than FY’2024-25. The total tax revenue target is Tk. 5.6 trillion, 8.9% above the revised FY’2024-25 budget, despite sluggish economic activities. Approximately 63% of the 2025-26 budget will be funded by NBR tax revenue, which faces challenges due to a lack of taxpayers and tax culture. Domestic borrowing is proposed at BDT 1.2 trillion, potentially limiting private sector growth. The proposed ADP is BDT 2.3 trillion.
Key Highlights
- The target 5.5% Real GDP growth can be attained subject to the faster economic recovery.
- Inflation rate may materially deviate from 6.5%, due to exchange rate pressure & domestic price spiral.
- Bangladesh’s ADP has grown by 1.43 times in past eight years (from Tk. 1,434 billion in FY2019-20to Tk. 2,053 billion in FY2025-26). ADP expansion supports progresses in critical projects nationwide, mainly in the form of construction of roads, bridges, highways, flyovers, and government mega-projects.
- Among the broad sectors, human resources got the top priority, which is reflected by the highest figure of ADP sinceFY2022.
- The proposed ADP 2024-25 reckoned the highest priority in the Human resources.
- Communication infrastructure sector got the second priority in the context of ADP which is observable as per the chart- Sector wise ADP 2022-26.
- Approximately 78% of the domestic debt will be derived from the banking sector, representing an increase of 3.3% compared to the previous budget. Consequently, this may somewhat slow the growth of private sector credit.
- Most of the proposed tax, VAT, and duty rescheduling may benefit certain local industries. Furthermore, widening the tax gap between listed and non-listed companies, decreasing turnover tax on securities trading, and lowering corporate tax for merchant banks will support the capital market over time.
