Zahid Hussain stresses reform-based budget in FY26

Country's renowned economist Dr Zahid Hussain has said the country needs a reform-based budget in the next fiscal year (FY26) where the present interim government might highlight the progress in the reform initiatives especially in the economic fronts.

"I think we need a reform-based budget... We earlier got many big size budgets, but those didn't highlight the reform initiatives... If the same happens, then the current government will appear to follow the footprints of their predecessors and that could disappoint everyone," he said.

Dr Zahid, who was the lead economist of the World Bank (WB), Bangladesh Office, said this while giving an interview to the BSS at his residence in the capital. 

He said the budget of the next fiscal could be an economic 'turning point' where everyone would be able to know what sort of policies would be undertaken.

The eminent economist said, "I think we need to wait for the upcoming budget to come to a final conclusion whether they are inclined to carry out reform initiatives or not." 

For attracting more investments and speeding up the GDP growth, he said the next budget will have to come up with credible fiscal, financial and structural policy reforms. They will have to deliver some quick wins.

"In case of containing inflation, I should say, the numbers do not show any convincing decline, and hence there is no room for monetary easing," he said.

Asked about the current 'health of the economy', he said following the student-led mass uprising in August last year, the interim government had inherited the economy in a very fragile condition from the previous regime five months back. "Gaining a visible improvement in the health of the economy from that condition within a short period of time is very tough," he noted.

Dr Zahid said wheels of the economy could not move in their usual pace during the July-August period of this fiscal year (FY25). 

Then afterwards, he said there were changes, but the current government did not get much time to reorganize the economy in a 'wholesale manner'. 

In order to expedite the GDP growth, he said the investors not only look for short-term measures, but also they look for long-term vision and strategies from the government. "In that case, there remains uncertainty or the sky of investment remains covered by heavy clouds...When you can't clearly see the condition, then an attitude like 'wait and see' develops. If you consider the current investment situation especially in the import of capital machineries, there is no such improvement while a lot still needs to be done," he said. 

Dr Zahid went on saying, "Besides, it won't be realistic to expect tectonic shifts in policies but the 'light of hope' must flash in the budget," 

Asked about the next budget priorities, he said that the priorities should be on social sector, Inflation rate decline will not be good enough, even if achieved. 

"The poor and the vulnerable need cash support to deal with the heightened cost of living, the health and education sector need budgetary measures to remedy past neglect, and the institutional restructuring in several key sectors will inevitably require fiscal accommodation of the social costs of transition," the eminent economist added.