The biggest question is where the money will come from, says Ahsan Mansur about budget

The former central bank governor expresses concern about the government's foreign borrowing target

Former Bangladesh Bank governor and economist Ahsan H Mansur has described the proposed budget for fiscal year 2026-27 as "overly ambitious", questioning the government's ability to meet its revenue and financing targets.

"The Tk 9.38 trillion budget is ambitious. The target of collecting Tk 7 trillion in revenue is ambitious. Achieving 6.5 percent GDP growth under the current domestic and global circumstances is also ambitious," Mansur said.

"Overall, the finance minister has presented an excessively ambitious budget. The biggest question is: where will the money come from? How will revenue increase during a time of economic stress?"

Finance Minister Amir Khosru Mahmud Chowdhury unveiled the proposed budget in parliament on Thursday.

Analysing the budget, Mansur said the government had prepared it amid highly challenging global and domestic conditions.

"The ambitious targets have turned it into an expansionary fiscal plan, the implementation of which will be extremely difficult," he said.

According to Mansur, the budget faces three major challenges.

"Firstly, achieving the massive revenue target will be difficult because the benefits of ongoing reforms are unlikely to become visible for another three to five years.

"Secondly, the revenue growth target appears excessively optimistic and more ambitious than current economic realities.

"Third, financing the budget remains a concern because the banking sector is fragile and uncertainty persists over foreign financing."

Mansur was replaced as central bank governor by Mostaqur Rahman on Feb 25 after the BNP assumed power.

He had largely remained out of the public spotlight for the past three and a half months and had not spoken to the media.

Speaking publicly about the budget on Thursday, he warned that liquidity pressures in the banking sector could worsen.

"The banking system is already under strain, and recent developments surrounding Islami Bank may further complicate the liquidity situation," he said.

"There are still questions about how banks will mobilise sufficient funds and whether the government will ultimately resort to additional money creation (printing bank notes) to finance spending."

Mansur also expressed concern about the government's foreign borrowing target.

"Foreign loan inflows are likely to decline by around 25 percent in the outgoing fiscal year 2025-26. Against that backdrop, the target of securing more than Tk 1.55 trillion in foreign loans under the new budget is unrealistic," he said.

"If this trend continues, obtaining loans from the IMF and other development partners could become increasingly difficult."

On banking-sector reforms, Mansur said the budget had correctly identified the sector's problems but lacked a clear strategy and specific reform initiatives for resolving them.

"Proposals such as introducing a bank resolution law and strengthening governance are positive steps. However, the budget does not provide a specific roadmap for implementing these reforms," he said.

"Statements and announcements alone are not enough. Genuine and effective reforms must begin immediately, even though it may take several years before their benefits become apparent."