Anu Muhammad is an academic, economist, and political activist. He is currently serving as a member of the Democratic Rights Committee. He taught in the Department of Economics at Jahangirnagar University. He became involved with the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports in 1998 and served as its member-secretary from 2005 to 2020. Recently, he spoke to Bonik Barta on various aspects of the 2025–26 national budget. The interview was conducted by Dedarul Hoque.

The total size of the 2025–26 budget is BDT 7.9 trillion. It’s BDT 70 billion less than last year. Many are saying that this year’s budget has been presented just like the ones by the previous government. What’s your assessment?

For valid reasons, no new mega projects have been taken up this time. Many ongoing projects have also seen budget cuts. So, in that sense, the size of next fiscal year’s budget could have been even smaller. Many had hoped that, given the pattern, priorities, and lack of transparency in recent fiscal years, this budget would at least signal the beginning of some change. There was indeed some mention of that at the beginning of the budget. It was said that the budget would move beyond GDP-centered, infrastructure-led growth and focus more on overall welfare and human development, etc. There was even a mention of implementing Dr. Muhammad Yunus’s theory of “Three Zeros.”

But none of that actually aligns with the rest of the budget structure. In fact, what followed seemed to go in the opposite direction. It felt like the people who wrote those ideas and the people who formulated the actual budget had no connection with each other.

Compared to previous ones, the priorities of this budget are no different. For instance, there’s still a huge allocation for public administration. Spending on things like vehicles, purchases, and various benefits has led to even higher costs for public administration this year. It increased in the revised budget of the last fiscal year and has gone up again in the proposed one. The same old mold has been followed to draft this year’s budget. And within that mold, crucial sectors like education, health, agriculture, and energy have again been pushed to the bottom! Even though they should’ve been placed at the top.

Despite the Finance Adviser’s promises, education and health continue to receive the same low share. Education has received less than 2 percent of GDP, and health less than 1 percent. When it comes to allocation for these sectors, Bangladesh remains at the bottom, not just globally but even within South Asia. And a significant portion of that allocation—due to lack of transparency—is wasted on corruption, flawed projects, and unnecessary constructions.

The interim government has limited time and can’t do much, we understand that. But they could’ve at least initiated a procedural shift. Instead, they stuck to the same old model on one hand and took a range of steps on the other just to please Trump and the International Monetary Fund (IMF).

What is your assessment of the tax system in Bangladesh?

To reduce inequality and ease the burden on the majority of people, there are three key ways. First, the tax system. Bangladesh has always had a low tax-to-GDP ratio. There’s a lot of talk about increasing it. But what’s really needed is to ensure tax collection from the wealthy. In the past, we’ve seen that those who are supposed to pay taxes often don’t, while the burden is pushed onto the majority of ordinary people.

The structure of Bangladesh’s tax system is such that indirect taxes dominate, while direct taxes are minimal. Direct taxes mostly come from salaried professionals, while the wealthy contribute very little! Over 60 percent of tax revenue comes from indirect taxes including VAT—and that continues in this budget as well. As a result, the tax burden on the majority remains unchanged, and in some cases, it’s even increasing.

Second, access to education and healthcare for the majority should be expanded. But no changes have been made in these sectors.

Third is social safety. Even in this sector, the size of the allocation has been inflated by including items that don’t really belong—like pensions, subsidies, and allowances for freedom fighters. If those are excluded, the actual allocation for social safety nets comes to less than 1 percent of GDP, while the South Asian average is around 3 percent. This shows that Bangladesh is far behind. And whatever little is allocated is often mismanaged. A universal rationing system should have been introduced. There’s no mention of it. In fact, the prices of essential items distributed through TCB have already been raised.

In reality, there’s nothing in this budget that brings hope or encouragement for the working class, farmers, or the vast majority who work in the informal sector.

In the tax system, tariffs on imported goods have been lowered in some areas or waived. This is partly due to the global impact of former U.S. President Donald Trump’s retaliatory tariff policies. We’re seeing how Trump’s tariff threats are sparking panic worldwide. But it became difficult for even him to sustain that madness, which is why he had to suspend those policies. Yet, after Trump’s announcement of retaliatory tariffs, Bangladesh reacted so strongly that, without any further thought or negotiation, duties on almost all U.S. imports were either waived or reduced.

Even the small duty on arms imports has been lifted. Other imported goods also saw reduced tariffs. For example, tariffs on locally produced plastic were increased, which is sensible. Because, we should reduce plastic usage. But duties on imported plastic were cut. That means more foreign plastic will flood into the country.

Tariffs on imported fish, meat, and clothing have also been reduced, which will lower government revenue. And to make up for that lost income, the government has imposed higher taxes on local industries or reduced existing tax breaks. Shockingly, tariffs have even been raised on large public buses.

Import duties on renewable energy components, especially solar panels, remain in place, while equipment for coal-based power plants still enjoys duty exemptions. This budget shows no departure from the pattern of the previous one.

What kinds of initiatives do you see in this budget to enhance national capacity?

National capacity is a critical issue. The previous government paid no real attention to it. As a result, sectors like energy, power, and digital technology didn’t see any meaningful investment in strengthening national capacity. People had hoped the interim government would prioritize this, but that didn’t happen either.

Because of weak national capacity, our dependence on imports is increasing. This dependence creates vulnerabilities in the economy, which has become even more evident during the Iran-Israel conflict. We are reliant not only on imported oil but also on imported LNG. And now, the current government is taking steps to further increase this LNG dependency.

But if we had invested in gas exploration, extraction, and renewable energy, we wouldn’t have had to rely so much on imports. That would’ve reduced the subsidy burden as well. Given the growing risks of war or the threat of war, this dependency will become even more dangerous and could hurt the entire economy in different ways. If the focus had been on strengthening national capacity, we wouldn’t be seeing the current rush to lease out Chattogram Port to foreign companies.

This year’s revenue target is BDT 5.64 trillion. Of that, BDT 4.99 trillion is expected to come from the National Board of Revenue (NBR). But historically, NBR has always failed to meet revenue targets. On top of that, NBR’s reform process is now mired in fresh complications. So is the revenue target achievable?

First, in Bangladesh, there has always been a tendency to give leniency to the wealthy and powerful. Second, our institutional systems have not been built on a solid foundation. Over the past 15 years, we’ve seen these institutions fall apart. No institutional process was allowed to function independently—everything operated on top-down instructions.

That’s why the most urgent task now is to free institutions from the influence of powerful aristocrats and make their processes autonomous and functional. But we don’t see any such initiative from this government either. If the IMF imposes new conditions, the government complies. But that alone doesn’t build institutional capacity. Real capacity comes from internal reform efforts, based on actual needs and goals. Institutions must be designed accordingly. Transparency and accountability need to be ensured.

Without these efforts, it will be difficult to meet the revenue target in the budget. Direct tax collection will likely underperform, but revenue from indirect taxes will continue. And to meet targets, the government will eventually place additional tax burdens on the public. Increases in gas, electricity, and fuel prices are essentially forms of indirect taxation, and their impact is even more far-reaching. Unless the revenue system becomes independent, transparent, and accountable, these shortfalls and weaknesses will persist.

The budget deficit has been projected at BDT 2.26 trillion. Of that, BDT 1.25 trillion will come from domestic loans and BDT 1.01 trillion from foreign loans. How risky is this reliance on loans for the country’s economy?

It was during Sheikh Hasina’s rule that reckless borrowing became a major problem for the country. That’s why we’re now paying a huge amount in interest—and interest payments have become the single largest component in the budget. We need to get out of this situation. To do that, we must stop implementing loan-dependent projects.

Yes, the interim government has suspended or canceled some projects. But under the Indemnity Ordinance, many large, loan-funded projects are still continuing. Public administration spending remains unjustifiably high. A lot of that money goes toward providing perks and privileges to bureaucrats. This inflates the expenditure and further widens the budget deficit. As a result, the government borrows even more.

When the government borrows excessively, it distorts the financial sector. Credit availability for the private or productive sectors shrinks. That’s harmful to the economy. Small and medium enterprises (SMEs) and micro-entrepreneurs are key drivers of economic growth. Across the country, millions of people are engaged in the informal sector. Many of them build businesses through sheer hard work and limited capital. There should be an institutional framework to support them.

If they’re supported properly, it will lead to stable employment. This will, in turn, energize the economy. Instead of taking out more loans from banks or financial institutions—and instead of lending to habitual defaulters—government-backed credit should be directed toward informal sector entrepreneurs.

When the government and loan defaulters monopolize borrowing, it worsens the economic crisis. This entire loan management system needs major reform. The government must reduce its borrowing and stop lending to defaulters. It’s essential to bring small and medium entrepreneurs into the fold of accessible financing.

High inflation has persisted in the country for quite some time, making life increasingly difficult for ordinary people. In April this year, the inflation rate stood at 9.17 percent. What steps has this budget taken to control inflation?

Over the past decade and a half, the economy came under pressure mainly due to rampant looting of wealth and widespread money laundering. After the fall of the previous government on August 5, the interim government found itself in a favorable position. Because, the groups responsible for that looting and illicit transfers of wealth are now inactive, their influence was relatively limited. The government could have used this opportunity to focus on encouraging investment and restoring discipline in the financial and private sectors. But instead, the way it has granted duty exemptions on imported goods while imposing additional tariffs on domestic production will only raise production costs. And once production costs go up, it inevitably drives inflation higher.

Moreover, heavy government borrowing also fuels inflation. If fuel prices rise, inflation will spike again. So the government now needs to consider how to avoid raising domestic fuel prices—even if international oil prices go up. In the past, when global oil prices were low, local prices remained high, which allowed huge profits to accumulate. That should now be taken into account to prevent price hikes. If fuel prices are increased, along with the government’s other policies, it’s unlikely that inflation will come down. In fact, if the prices of oil, gas, and electricity are raised again, inflation will likely rise further.

Unemployment is rising in the country. Every year, hundreds of thousands of students graduate, but job creation isn’t keeping pace. How can this budget help generate employment?

This government came to power through a mass uprising. It should have remembered that the uprising gained momentum largely because of demands for employment. Over the past 10 months, nearly every protest, gathering, or demonstration has revolved around one central demand—“Job.” Whether it’s school and college teachers, students, workers, rural electricity staff, women from the “Tottho Apa” program, or members of Ansar—all of them have demanded secure and reliable employment. People just want to work to survive; no one is asking for special privileges.

That’s why employment should have been the central focus of this budget. While it was mentioned in speeches, it didn’t translate into real action. The government’s budget allocations and initiatives should have prioritized job creation. Right now, there are hundreds of thousands of vacant positions in schools, colleges, universities, hospitals, and various government institutions, but those positions are not being filled.

Worse still, poor decisions have actually increased unemployment and poverty. In some cases, factories were shut down because the owners were found guilty of wrongdoing. But if the owners committed crimes, why should the workers be punished? That’s a deeply flawed approach. At a time when employment generation was critical, shutting down factories has only added hundreds of thousands more to the ranks of the unemployed.

This is a major shortcoming—both of the government and this budget. The very issue that triggered a mass uprising and brought down the previous government—the demand for jobs—is not being prioritized by the current government. Had they paid attention to that, the structure of the budget would have looked very different. Actually, the government talks a lot about reform, but there’s little sign that it’s initiating the reforms that truly matter. That’s why this budget sticks to the same old mold.

[This interview was originally conducted in Bangla and published in both the Print and Online editions of Bonik Barta. It has since been translated for the English edition.]