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Bangladesh Institute of Development Studies (BIDS) Director General Dr A K Enamul Haque has said the government must keep inflation at a tolerable level through supply-side interventions although Bangladesh may face challenges to reduce inflation quickly due to global conflicts, food shortages and climate-related crop damages.
"Inflation will be very difficult to reduce quickly because crops have been damaged and global uncertainties remain high," he told BSS in an interview shedding lights on the probable priorities of the government to rein in inflation, boosting GDP growth and augmenting revenue collection in the upcoming budget for the next fiscal year (FY27).
He said the government should focus on increasing food supply through imports and public distribution rather than relying solely on monetary support programmes.
"If supply does not increase and the market is left entirely to the private sector, inflationary pressure will rise further," he warned.
Dr Enamul further stressed that economic growth should remain the central objective of the FY27 budget.
"If economic growth momentum is maintained, other macroeconomic indicators can gradually be aligned," he added.
Regarding revenue collection, Dr Enamul said Bangladesh's tax policy framework still suffers from major structural weaknesses and excessive focus on collection targets rather than economic expansion.
"We are trying to increase revenue without increasing investment and economic growth. That approach is a major policy mistake," he said.
The BIDS DG argued that revenue collection targets cannot realistically be achieved if GDP growth remains below 4 percent.
"If economic growth remains weak, attempting to achieve large revenue targets will not be effective," he said.
Instead, he emphasized that investment and employment generation should become the primary drivers of fiscal strategy.
"There are only two simple ways to increase revenue sustainably - increase investment and increase employment," he noted.
The BIDS Director General said rising fuel and fertilizer prices caused by the Middle East conflict could increase the cost of agricultural production globally, pushing up food prices in the coming months
The economist stressed that vulnerable populations should receive direct food support through expanded OMS programmes and social safety nets.
"Bangladesh has a significant food-insecure population. That is why food supply support is more important than only giving cash," he said.
Dr Enamul also called for integrating existing welfare programmes under a unified family card system to improve efficiency and reduce misuse.
Citing that high taxation and policy uncertainty are encouraging entrepreneurs and freelancers to shift businesses abroad, he said many entrepreneurs are moving operations to countries where tax burdens are lower.
He added that some Bangladeshi freelancers avoid bringing foreign earnings home because they fear excessive taxation and regulatory pressure.
In this regard, the economist recommended forming an independent expert tax commission to redesign tax policies with greater emphasis on economic growth and investment promotion.
"Tax policy should focus on strengthening the economy, not merely targeting expenditure financing," he said.
He also recommended a clear long-term strategy for increasing the tax-to-GDP ratio.
"We often announce that tax collection will increase next year, but we rarely explain the strategy for achieving it," he observed.
According to him, Bangladesh needs long-term institutional reforms separating tax policy formulation from tax collection administration.
"The authority responsible for collecting taxes should not independently determine tax rates and policies," he said.
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