The National Board of Revenue (NBR) has started budget-related work for the fiscal year 2026-27 and has sought proposals from business bodies and other relevant organisations.

According to the NBR, letters have already been sent on 18 February from the budget-related departments asking them to submit their proposals and recommendations on the budget to the NBR by 15 March.

In a letter to the business bodies, signed by Barrister Badruzzaman Munshi, second secretary of the NBR's VAT wing, the agency said, "You are requested to send your organisation's opinions with the aim of rationalising the tax-to-GDP ratio, facilitating ease of doing business, and resolving procedural complexities."

Sources at the NBR said pre-budget discussions with business representatives and other stakeholders may begin by the last week of this month in preparation for the next budget. To this end, the NBR has also formed a committee, appointing a first secretary of NBR as the chief budget coordinator, sources said.

This will be the first budget for the new government led by the BNP. Although budgets during the previous two BNP governments were prepared under the leadership of late finance minister M Saifur Rahman, this time the budget will be prepared under the leadership of Finance Minister Amir Khasru Mahmud Chowdhury.

He has already provided preliminary directions during a meeting held last Saturday with officials from the NBR and other relevant departments regarding the budget, according to officials.

Revenue collection in January grew by only 3.2% year-on-year – the weakest in recent months – signalling stress in trade flows and slowing economic activity.

With customs revenue remaining volatile and domestic demand softening, the slowdown threatens to complicate the new government's fiscal management in the months ahead.

The January figure marks a sharp deceleration from the robust growth recorded earlier in the fiscal year, when monthly collections expanded by 18% to 25% between July and September. Although revenue growth remained in double digits through much of the first half, January's modest increase indicates that the initial rebound in imports and domestic activity is losing momentum.

In January alone, revenue collection fell short of the target by Tk15,000 crore.

According to updated data released by the National Board of Revenue (NBR) today (23 February), revenue collection during the first seven months (July–January) of the current fiscal year fell short of the target by more than Tk60,000 crore.

Although revenue growth during the July–January period stood at around 13%, actual collection reached Tk2.63 lakh crore against a target of Tk2.83 lakh crore.

Breaking with convention after the last budget, the government revised the annual revenue target upward by Tk54,000 crore midway through the fiscal year, raising it to Tk5.54 lakh crore.

NBR data show that over the past seven months, average monthly revenue collection stood at slightly below Tk32,000 crore. To meet the revised target, however, the revenue authority would need to collect more than Tk66,000 crore per month on average for the remaining months of the fiscal year.

Experts say this is not realistically achievable.

Dr Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), told The Business Standard, "The economy has not gained the kind of momentum that would allow the NBR to collect revenue at such a high rate. As a result, the government is heading towards another large shortfall this fiscal year."

She added that the new government under Tarique Rahman has incorporated additional spending commitments in its election manifesto, including family cards and agricultural loan waivers. If expected revenue is not realised, fiscal pressure on the new administration will intensify.

While revenue growth exceeded 15% in six of the seven months of the fiscal year, officials were unable to explain the sudden drop in January. When contacted, a senior NBR official said he could not specify the reason behind the sharp slowdown.

Data analysis shows that import tax collection in January actually declined by 1.31% compared to the same month last year. Value-added tax (VAT) collection grew by only 2.57%, while income tax recorded relatively better growth at 7%, though still modest.

Nearly 90% of import tax is collected through Chattogram Custom House. When contacted, Mohammad Shafi Uddin, Commissioner of Custom House Chattogram, said the customs house recorded 15% growth in January. Why overall growth remained weak despite this remains unclear.

Explaining the underperformance in revenue collection, Fahmida Khatun cited slow investment and sluggish economic growth as major factors. She also pointed to institutional capacity constraints within the NBR, saying the tax net is not expanding and tax evasion is not being effectively curbed.

"Necessary reforms to boost revenue collection have largely not been implemented," she said. "As a result, prospects for stronger revenue performance in the coming months also appear limited."

The general election held on 12 February has reduced near-term political and policy uncertainty in Bangladesh, a development that could bolster macroeconomic stability, according to Fitch Ratings.

However, in a report released on 22 February US time, the global ratings agency cautioned that the ultimate impact on the country's credit profile will depend on the new government's ability to execute critical reforms to address weak governance, banking-sector fragilities, and a fragile external liquidity position.

Fitch noted that the supermajority secured by the BNP-led alliance, coupled with a successful referendum, provides a clear mandate for constitutional and economic shifts.

High inflation, tight policy rate weigh on economic momentum in Q2 of FY26: MCCI

The BNP won 209 seats, while the Jamaat-e-Islami and its allies secured 77 of the 299 contested seats.

This two-thirds majority is expected to support the implementation of the government's policy agenda and reduce the risk of a political vacuum that could otherwise complicate economic decision-making, according to Fitch's report.

The ratings agency highlighted that the referendum approval could pave the way for institutional strengthening, including a shift to a bicameral legislative system, enhanced judicial independence, and the institution of term limits for the prime minister.

Despite these positive signals, Fitch warned that implementation remains complex and execution risks remain elevated.

UN CDP to assess Bangladesh’s graduation readiness as 3-year deferral sought

It also noted that political polarisation and the military's potential role in politics continue to pose lingering risks.

Fitch observed that the BNP's manifesto signals a commitment to continuing the economic and fiscal reforms initiated during the caretaker government period.

The agenda also points to higher social spending, which could, in Fitch's observation, add pressure to public finances if revenue‑mobilisation measures underperform, and would test the authorities' ability to balance growth and electoral commitments with fiscal consolidation.

Additionally, this agenda aligns with the $5.5 billion International Monetary Fund (IMF) programme running through 2026-2027 since 2023.

A centrepiece of this fiscal plan is a medium-term goal to raise the tax-to-GDP ratio to 10% through tax administration reforms and a broader tax base.

Bangladesh’s forex reserves rise to $29.86b

"This matters for credit quality because Bangladesh's structurally low revenue intake remains a key weakness," states the report.

Fitch currently projects government revenue-to-GDP to reach 8.6% by the 2027 fiscal year, up from 7.8% in FY25.

The agency further noted a pro-private-sector tilt in the new government's stance, aiming to lift foreign direct investment to 2.5% of GDP from a Fitch-estimated 0.4% in FY25.

The BNP's pledges to tackle non-performing loans and improve banking governance were also cited as essential steps to addressing constraints on the sovereign credit profile.

ADP spending drops by Tk9,300cr YoY in 7 months

On the external front, foreign-exchange reserves showed improvement, reaching $29.7 billion as of 10 February, compared to $22.3 billion in June 2024.

The Fitch report concluded that a manageable external debt repayment profile and the prevalence of government-backed debt help contain refinancing risks, but also underscore the importance of maintaining macro-stabilisation policies that keep external financing risks in check.

Delivering structural reforms, improving external liquidity and lifting revenue collection will be crucial to restoring macroeconomic stability in Bangladesh, said Fitch Ratings in a report released on Sunday.

The global rating agency said the general election held on February 12 has eased near-term political and policy uncertainty, creating room for progress on stabilisation.

The Bangladesh Nationalist Party (BNP)-led alliance secured a parliamentary supermajority, along with a majority “yes” vote in a referendum that could pave the way for constitutional reforms.

However, the road ahead will not be straightforward, it warned.

Fitch said longstanding credit constraints such as weak governance, fragilities in the banking sector and a thin external liquidity buffer mean the new government’s ability to carry through its macroeconomic and fiscal reform agenda will determine the rating impact.

Fitch Ratings, one of the big three global credit rating agencies alongside S&P Global and Moody’s, said that execution will be decisive.

The referendum result could open the door to institutional reforms, including a shift from a unicameral to a bicameral system, stronger judicial independence and term limits for the prime minister.

“However, implementation could be complex and time-consuming, keeping execution risk elevated.”

Fitch underlined the importance of staying the course under the $5.5 billion programme with the International Monetary Fund (IMF). Stronger tax mobilisation and prudent management of foreign exchange reserves will also be vital to underpin stability and support durable growth.

“The reform agenda appears consistent with the macro-stabilisation agenda under the IMF programme,” Fitch said.

It added that “ongoing reform implementation and durability of such reforms beyond the IMF programme will be a key condition for facilitating macroeconomic stability and growth.”

At the same time, external buffers remain a near-term watchpoint. “External liquidity remains another near-term indicator even as reserves improve,” Fitch noted, adding that policymakers must maintain stabilisation measures to “keep external financing risks in check.”

On public finances, the agency described the structurally low revenue intake as a core weakness. The BNP manifesto sets a target of raising the tax-to-GDP ratio to 10 percent through administrative reform, fewer exemptions and a broader tax base.

“This matters for credit quality,” the agency said, signalling that stronger revenue performance will be central to easing fiscal strain and entrenching stability.

Fitch projects general government revenue to GDP at 8.6 percent by FY27, up from 7.8 percent in FY25.

Policy signals in the BNP manifesto suggest the new government is likely to continue the economic and fiscal reforms initiated under the caretaker government. At the same time, plans for higher social spending could stretch public finances if revenue measures fall short, testing the authorities’ ability to balance growth ambitions and electoral pledges with fiscal discipline.

The manifesto also outlines a pro-private sector agenda. It promises simpler licensing rules, incentives for export-oriented industries and a push to lift foreign direct investment to 2.5 percent of GDP from an estimated 0.4 percent of GDP in FY25.

Efforts to strengthen governance in banks and tackle non-performing loans (NPLs) could, if delivered, ease a major constraint on the sovereign credit profile.

With a two-thirds majority in parliament, the BNP should have the numbers to press ahead with its policy plans. The election outcome also lowers the risk of a prolonged political vacuum that could have hampered economic decision-making.

Still, political risk has not disappeared. Bangladesh, rated B plus with a Stable outlook, has a history of polarisation and pre-election unrest. That leaves scope for renewed tension if promises prove hard to fulfil or if performance falls short of expectations.

“The military may also continue to play a role in politics,” said the agency.