A budget is a statement of national priorities. It reflects what a state values, what it is willing to invest in, and what future it hopes to build.

The debate surrounding the FY 2026–27 budget has focused heavily on the fiscal deficit, revenue targets, and growth projections. But it overlooks a fundamental question: can Bangladesh translate public expenditure into public value?

The fiscal deficit is not the budget’s greatest challenge. Institutional capacity is.

At approximately 3.6 percent of GDP, the projected deficit is not extraordinary by international standards. Many countries have operated with larger deficits while sustaining growth and investing in long-term development. Vietnam, for example, has financed infrastructure, industrial expansion, and export competitiveness while carrying a greater fiscal burden.

The issue is therefore not whether Bangladesh can tolerate a deficit. The issue is whether public spending produces outcomes that justify the cost.

For most citizens, the success of a budget will not be measured through fiscal ratios. It will be measured through whether a parent can access healthcare, whether a graduate can find meaningful employment, whether a farmer can transport goods efficiently, and whether a child receives a quality education regardless of where they are born.

This is where the conversation becomes about institutions.

Deficits are not inherently problematic. Governments routinely borrow to build infrastructure, expand public services, and invest in human capital. Development requires spending. The challenge emerges when states struggle to convert expenditure into results.

Bangladesh faces some major constraints: inflationary pressures, foreign exchange vulnerabilities, debt-servicing obligations, and a historically weak revenue base, which leaves little room for error. If revenue projections fall short, implementation fails. Projects slow down, allocations are revised, and additional borrowing becomes necessary.

The country’s long-standing revenue challenge illustrates this problem. Harvard economist Jay Rosengard has written about Bangladesh’s persistently low tax-to-GDP ratio and the structural weaknesses of its revenue administration. Bangladesh aspires to upper-middle-income status while maintaining one of the lowest tax collection rates among comparable economies. The result is a recurring dilemma: public expectations continue to rise while the state’s ability to finance those expectations remains constrained.

The work of Harvard economist Malcolm McPherson points to a related concern. Budgets may contain ambitious commitments, but when revenues fail to materialise, implementation is often compressed. Projects are delayed, programmes are scaled back, and the gap between policy promises and public experience widens.

Ultimately, a budget should not be judged by the size of its allocations. It should be judged by whether those allocations improve people’s lives.

Public value is created when citizens experience tangible improvements in their daily lives. A school building is an output. Improved literacy, stronger critical thinking skills, and greater opportunities for students represent public value. A road is an output. Reduced travel time, safer mobility, and increased economic activity represent public value. Public expenditure acquires meaning when it translates into outcomes that citizens can see, feel, and benefit from.

Education offers a useful example here.

Few investments generate returns comparable to education. Yet educational transformation is not produced by budget allocations alone. It is produced by institutions capable of translating resources into learning.

Bangladesh continues to allocate significant resources to education, but the challenge extends beyond funding levels. Several rapidly industrialising Asian economies have invested not only in educational infrastructure but also in teacher development, curriculum reform, assessment systems, and administrative capacity.

Initiatives such as “One Teacher, One Tab” reflect a broader tendency to confuse technological provision with educational reform. A tablet, by itself, does not improve learning outcomes. What matters is the ecosystem around it: teacher preparation, curriculum quality, reliable connectivity, technical support, and assessment systems that reinforce meaningful learning. When these foundations are weak, technology functions less as a pedagogical tool and more as a procurement item. The challenge is therefore not access to devices alone, but the institutional capacity required to translate technology into improved educational outcomes.

The relevant question is not whether teachers receive devices. The relevant question is whether students learn more effectively, whether teachers become more capable, and whether schools expand opportunities for the children who depend on them most.

The same logic applies to inclusion.

Budgets often speak the language of growth, development, and opportunity. Yet inclusion cannot be measured solely through the distribution of resources. It must be measured through access to opportunity.

As economist Thomas Piketty has argued, inequality is not simply a matter of income. It is also a matter of unequal access to the institutions that shape life chances. Schools, universities, healthcare systems, infrastructure, and labour markets all influence who succeeds and who is left behind.

Reducing inequality, therefore, requires more than redistribution. It requires building institutions that expand opportunity.

Inclusive growth is ultimately a question of opportunity distribution. Economies grow when individuals are able to develop skills, participate productively in the labour market, and withstand economic shocks. This requires technical and vocational pathways that connect training to employment, universities that produce graduates with relevant competencies, and healthcare and social protection systems that prevent temporary setbacks from becoming permanent disadvantages. The test of inclusive development is not whether growth occurs, but whether access to opportunity remains determined by talent and effort rather than geography, income, or circumstance of birth.

Countries that have successfully expanded opportunity did not do so through spending alone.

Vietnam’s transformation was supported by decades of investment in state capacity, public administration, and long-term economic planning. Singapore’s success rests on a public sector capable of implementing policy with consistency and accountability. South Korea’s development was driven not only by industrial policy but also by investments in bureaucratic capability, education, and institutional reform.

Bangladesh’s circumstances differ from those of Vietnam, Singapore, or South Korea. No development model can be imported wholesale. But a common lesson emerges from each of these cases: development succeeds when states can deliver on their promises.

The success of the FY 2026–27 budget will not ultimately be determined by the size of its deficit. It will be determined by whether citizens experience the promises embedded within it.

Budgets can announce priorities. Institutions determine whether those priorities become reality.

Bangladesh’s development challenge is no longer identifying what needs to be done. The country has plans, targets, and ambitions in abundance. The harder task is building institutions capable of delivering on them.

That is why the most consequential deficit confronting Bangladesh today may not be fiscal. The real deficit is the gap between what the state promises and what it is able to deliver.

Sarzah Yeasmin is a researcher working at the intersection of education, technology, and public policy.