Limited fiscal space among key challenges for new govt ahead of budget: Debapriya
The Centre for Policy Dialogue distinguished fellow said this situation requires strict fiscal discipline and careful prioritisation of expenditure.
Eminent economist Debapriya Bhattacharya has said Bangladesh's new government is preparing its first national budget amid structural weaknesses, incomplete reforms and growing economic pressure, with limited fiscal space emerging as a major challenge.
Speaking at a briefing titled "Thoughts on the First Budget of the New Government", organised by the Citizen's Platform for SDGs in Dhaka today (31 March), Debapriya said the government is operating under a "hard budget constraint".
The Centre for Policy Dialogue (CPD) distinguished fellow said this situation requires strict fiscal discipline and careful prioritisation of expenditure.
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Debapriya outlined four key pressures shaping the upcoming budget.
First, he said the economy is dealing with structural weaknesses and unfinished policy reforms carried over from the previous government, while the new administration is still in a transition phase.
Second, the government is under pressure to fulfil electoral commitments while also advancing overdue reforms in areas such as revenue mobilisation and public expenditure management.
Third, he highlighted limited fiscal space – where the government's ability to increase spending is restricted due to low revenue collection and financing constraints.
"Without sufficient resources, expanding the size and effectiveness of the budget becomes extremely difficult," he said.
Fourth, he pointed to external sector imbalances, particularly pressures on the balance of payments, including challenges related to remittances, exports, foreign direct investment, external assistance and debt servicing.
Debapriya also warned that global uncertainties, including geopolitical tensions and rising energy prices, are adding to the country's economic vulnerabilities.
He noted that Bangladesh is now entering a phase of "hard budget constraint", a condition that requires policymakers to adjust expectations and responses.
He recommended both short-term stabilisation measures and medium-term planning, including effective implementation of a three-year Medium-Term Budgetary Framework to maintain fiscal sustainability.
He said failure to address these challenges could limit the effectiveness of the upcoming budget in stabilising the economy and supporting growth.
