Economy
Price Surge on Select Products Following Budget Changes
Finance Minister AH Mahmood Ali presented the national budget for the fiscal year 2024-25, amounting to Tk 797,000 crore, in the Jatiya Sangsad today. The presentation took place under the chairmanship of Speaker Dr. Shirin Sharmin Chaudhury and in the presence of Prime Minister Sheikh Hasina.
This marks the 53rd budget of independent Bangladesh, the first for the current government’s fourth consecutive term, the 16th continuous budget, and the 21st under the Awami League-led administration. Notably, this is the inaugural budget presented by Finance Minister AH Mahmood Ali.
The proposed budget includes increased taxes and duties on various products, leading to higher prices for items such as cigarettes, water filters, cashews, refrigerators, air conditioners, ice cream, beverages, bricks, LED bulbs, tobacco products, unrefined edible oil, tube lubricating gel, synthetic corundum, aluminum oxide, fluorescent lamp parts, glass, plastic, medical equipment, capital machinery, construction materials, SIM cards, auctioneers, security services, and lottery tickets. Consequently, household expenses and travel costs are expected to rise.
Increased Costs Due to Tax Changes:
- Cigarettes: The budget proposes increasing the supplementary duty on all types of cigarettes, with a suggested 65.5% supplementary duty on three tiers of cigarettes, raising their prices. The maximum retail price for 10 grams of jorda is set at Tk 48, and for guli, Tk 25.
- Water Filters: Import duty on water filters, now produced domestically, is raised from 10% to 15%.
- LED Bulbs: Import duties on LED and energy-saving bulb components are increased by 10%, likely raising their prices.
- Cashews: Import duty on shelled cashews is raised from 5% to 10% to protect domestic cultivation.
- Refrigerators and Air Conditioners: VAT and duties on components used in the production of refrigerators and air conditioners are increased, leading to higher prices.
- Construction Costs: Import duties on LRPC wire are increased, impacting construction expenses.
- Vehicle Conversion Kits: Import duties on CNG-LPG conversion kits and related components are raised from 3% to 5%, increasing conversion costs.
- Generators: A 1% import duty is introduced on components used in assembling and producing generators, affecting prices.
- Imported Mackerel: VAT and advance income tax on imported mackerel are set at 15% and 5%, respectively, increasing their cost.
- Industrial Raw Materials: A 1% import duty is imposed on 33 types of raw materials used in industries, such as unrefined edible oil, aluminum ingots, and components for
- LED bulbs and fluorescent lamps.
- Economic Zones: Concessions on capital machinery and construction materials for industrial establishments in economic zones and high-tech parks are withdrawn, introducing a 1% import duty.
Sectoral and Service Tax Changes:
- Tour Operators: The existing VAT exemption for tour operator services is withdrawn.
- Entertainment: VAT for amusement parks and theme parks is increased from 7.5% to 15%, affecting leisure costs.
- Auction Houses and Security Services: VAT is raised from 10% to 15% on auction houses, security services, and lottery tickets.
- Bricks: Specific taxes on bricks are proposed to increase from 10% to 20%, impacting construction costs.
- Ice Cream and Beverages: VAT increases on ice cream and carbonated beverages are proposed, raising their prices.
- SIM Cards: Supplementary duty on mobile phone SIM usage is raised from 5% to 20%, increasing the cost of mobile communication and internet usage. VAT on e-SIM provision is increased from Tk 200 to Tk 300.
The proposed budget’s theme is “Commitment to Building a Happy, Prosperous, Developed, and Smart Bangladesh.” The overall budget size is set at Tk 797,000 crore, a 4.60% increase from the current budget of Tk 761,785 crore. The Annual Development Programme (ADP) is fixed at Tk 265,000 crore, up from Tk 263,000 crore in the previous fiscal year. The total deficit is projected at Tk 256,000 crore, down from Tk 283,785 crore in the revised budget for the current fiscal year.
Revenue targets are set at Tk 545,400 crore, compared to Tk 500,000 crore in the previous year. GDP growth is targeted at 6.75%, with inflation expected to be 6.5%.
To cover the budget deficit, loans of approximately Tk 300,000 crore are anticipated from domestic and foreign sources. The budget also includes allocations to prepare the youth for a “Smart Bangladesh” and measures to enhance social safety programs to mitigate inflation’s impact. Climate change’s effects on the economy are also analyzed in this budget, and efforts to broaden the tax base will include introducing taxes in new areas.
The International Monetary Fund (IMF) has urged Bangladesh to maintain a tight monetary policy to contain inflation, while stressing that monetary tightening alone will not be enough to restore economic stability.
Inflation in Bangladesh rose to 8 per cent in September, according to the IMF. The Washington-based lender has called for broader reforms in the financial sector, stronger revenue mobilisation and improvements in overall economic management to address the country’s persistent economic challenges.
Sonali Jain-Chandra, deputy director of the IMF’s Asia and Pacific Department, made the remarks in response to a question at a news conference on the economic outlook for Asia and the Pacific, held on the sidelines of the IMF and World Bank Group annual meetings in Bangkok, Thailand.
Asked whether tight monetary policy alone would be sufficient to tackle inflationary pressures that have persisted for more than three and a half years, Jain-Chandra said maintaining a restrictive monetary stance was important, but needed to be accompanied by other reforms.
Bangladesh is currently facing challenges in three key areas: revenue mobilisation, the financial sector and inflation, she said.
The IMF also expressed concern over the fragile state of Bangladesh’s financial sector, saying a credible reform strategy was needed to strengthen the sector’s capacity and ensure stability.
The fund also highlighted the country’s persistently weak revenue collection. Bangladesh’s tax-to-GDP ratio has declined over time and currently stands at around 7 per cent, placing it among the lowest in the world, according to the IMF.
The IMF stressed the need for a coordinated effort to increase revenue collection, saying higher government revenues were essential to finance development expenditure and strengthen the financial sector.
It called for necessary reforms to the revenue system and effective measures to improve the government’s capacity to generate income.
Talks Under Way on New IMF Programme
Meanwhile, discussions are continuing on a potential new lending programme for Bangladesh.
Jain-Chandra said Bangladeshi authorities approached the IMF in May for support under a new programme after deciding not to draw further instalments under the previous arrangement.
In response to the request, an IMF mission visited Dhaka in July to discuss various aspects of Bangladesh’s economic reform agenda.
According to Jain-Chandra, the reform issues discussed during the visit were closely aligned with the recommendations outlined in the IMF’s Article IV consultation for Bangladesh earlier this year.
The IMF has remained in regular contact with Bangladeshi authorities since the July visit, she said.
Jain-Chandra added that the fund remained closely engaged with the authorities and was ready to support Bangladesh in initiating the reforms needed to address its economic challenges.
The International Monetary Fund (IMF) has projected that Bangladesh’s gross domestic product (GDP) will grow by 3.2 per cent in the 2026-27 fiscal year, while average inflation could rise to 10.9 per cent, signalling mounting pressure on the country’s economy.
The projections were outlined in the IMF’s World Economic Outlook (WEO) report, released on Tuesday.
The latest growth forecast marks a significant downward revision from the 4.3 per cent projected by the IMF in April. The fund had subsequently forecast growth of 3.5 per cent in July before lowering its estimate further to 3.2 per cent.
The IMF has also sharply revised its inflation outlook for Bangladesh. In April, it projected average inflation of 6 per cent for the 2026-27 fiscal year. The latest estimate raises that figure to 10.9 per cent.
The combination of slower economic growth and persistently high inflation points to continued pressure on Bangladesh’s macroeconomic stability.
Bangladesh growth outlook trails other forecasts
The IMF’s latest growth projection for Bangladesh is lower than those of other major international development institutions.
The World Bank has forecast GDP growth of 3.4 per cent for Bangladesh in the 2026-27 fiscal year, while the Asian Development Bank (ADB) has projected growth of 4 per cent.
According to the IMF, Bangladesh’s economy grew by 3.6 per cent in the 2025-26 fiscal year, following growth of 3.5 per cent in the preceding fiscal year.
India, Bhutan expected to grow faster
The IMF has projected stronger economic growth in neighbouring countries, with India’s economy expected to expand by 7 per cent and Bhutan’s by 6.9 per cent in the relevant fiscal year.
The contrasting forecasts highlight the challenges facing Bangladesh as it seeks to restore economic momentum while tackling persistent inflation.
The IMF’s latest projections come as the annual meetings of the IMF and the World Bank Group are underway in Bangkok, Thailand.
Bangladesh’s economic situation, reform programmes and efforts to secure financing from development partners are among the key issues receiving attention during the meetings.
The World Bank supports the Bangladesh government’s policies to address the country’s current economic challenges, restore stability and implement medium- and long-term development plans, Finance Minister Amir Khasru Mahmud Chowdhury said on Tuesday.
He said the global lender was broadly aligned with Bangladesh’s economic programmes and policy priorities and would continue to support the country’s economic recovery and future development.
The finance minister made the remarks while speaking to journalists after a meeting with a World Bank managing director in Bangkok, Thailand, on October 13.
Amir Khasru said Bangladesh’s economy was facing significant challenges when the current government took office. Alongside dealing with the financial and economic burdens inherited from the previous period, the country was also having to navigate global economic disruptions caused by ongoing wars and geopolitical tensions.
He said the World Bank understood the realities facing Bangladesh and supported the government’s policy approach to overcoming the economic difficulties.
“The World Bank is aligned with the programmes and policy direction we have set to restore economic stability and ensure future development,” the minister said, adding that both sides would continue working together.
He said the World Bank was willing and prepared to provide the assistance Bangladesh needed.
No decision yet on proposed $10 billion in additional assistance
Clarifying reports that Bangladesh had sought an additional $10 billion in assistance from the World Bank, the finance minister said no final decision had been made.
He said discussions with the lender were ongoing and that possible proposals would be reviewed in light of those discussions. The process could take several months to complete, he added.
“No decision is being made at this stage. I have seen several inaccurate reports here and there. This is a discussion, and there will be follow-up based on these talks. It is a process that will continue over the next few months,” he said.
The minister stressed that the ongoing discussions should not be interpreted as a final agreement. Rather, they were intended to establish a basis for determining the next steps and considering possible decisions.
Further discussions would also take place in Dhaka, he said.
Expressing satisfaction with the progress of the talks, Amir Khasru said Bangladesh was in a favourable position to establish a framework for future cooperation.
He reiterated that the government’s economic policies, programmes and medium- and long-term development plans were broadly aligned with the World Bank’s position.
Government’s economic agenda aligned with BNP manifesto
The finance minister also said the World Bank’s position was consistent with the government’s economic plans and the Bangladesh Nationalist Party’s (BNP) election manifesto.
He said discussions were underway on how to address the country’s economic challenges and achieve the government’s development objectives.
According to the minister, the government has submitted a written proposal outlining a framework for partnership with the World Bank. Discussions on the proposed framework will continue.
He said the World Bank had provided various recommendations and suggestions, while Bangladesh had also presented its own proposals and recommendations.
Further discussions would be based on these submissions, he added.
Government optimistic about inflation and GDP targets
Asked about forecasts by the World Bank and the Asian Development Bank (ADB) on inflation and gross domestic product (GDP) growth, and how they compared with the government’s targets, the finance minister said the government did not intend to dispute the projections made by other institutions.
He said the institutions had prepared their forecasts based on their own calculations and analyses, adding that the country’s economic performance would become clearer as progress on key indicators was assessed over time.
“We do not want to dispute anyone’s projections. They have made their estimates based on their own calculations. We are carrying out our work, and they are doing theirs. What matters most is that the cooperation we need continues,” he said.
The minister expressed optimism that the government would be able to meet the inflation targets set out in the national budget.
He said the government was working to restore economic stability through continued engagement with the World Bank, implementation of its economic policies and progress on medium- and long-term development plans.
