Budget: Expectations for democratic transition

The BNP government has announced its first proposed budget—a massive spending plan of Tk9.38 trillion for the 2026–27 fiscal year, representing a 19% increase over the revised budget for 2025–26. Of this amount, Tk6.04 trillion is expected to come from tax revenue, while Tk910 billion will be generated from non-tax revenue. Of the remaining Tk2.43 trillion, Tk1.56 trillion is projected to come from foreign loans and Tk1.27 trillion from various domestic sources. The proposed budget allocates Tk3.16 trillion for development expenditure, 47% higher than the previous development budget.

Any government budget serves as a roadmap for fulfilling promises made to the public. The budget announced by the new political administration likewise reflects its stated commitment to economic recovery, employment generation and social protection, encapsulated in the theme: “Advancing Towards a Democratic, Humane and Inclusive Economy.” Everything necessary to improve people’s living standards appears to be included in the budget. Yet what government budget has not promised similar outcomes? Over the past 55 years, every administration that has come to power since independence has presented comparable economic visions aimed at nation-building and improving people’s welfare, but the desired and measurable results have remained elusive.

In the mid-1990s, after the fall of military ruler Hussain Muhammad Ershad, the then World Bank Country Director for Bangladesh posed a thought-provoking question in an article analysing the country’s development stagnation: “Does development trickle down?” Though metaphorical, the remark contrasted Bangladesh’s sluggish progress with the dynamic development of another war-ravaged country, Vietnam. Having secured its liberation from foreign occupation four years after Bangladesh achieved independence, Vietnam transformed its economy within two decades in a way Bangladesh did not. Even today, the gap remains substantial. Development did not merely “trickle down” in Vietnam; the country remained steadfast in implementing its political commitments.

Development, in reality, does not simply trickle down. Politicians are often eager to attain power, but the realities they face once in office are far more complex. Rather than focusing on fulfilling promises, many become preoccupied with completing their term in office or extending their hold on power through poor governance. As misgovernance intensifies, public frustration grows. Governments frequently respond by deploying state power to suppress political unrest, yet stability remains elusive. Bangladesh’s 55-year history offers numerous examples of such patterns.

In a country marked by persistent political instability, terrorism, murder and sexual violence, a weak investment climate is hardly surprising. Misgovernance, political uncertainty and structural barriers have discouraged both domestic and foreign investment. The observations made about Bangladesh’s development trajectory three decades ago continue to resonate today.

The contrast with Vietnam is particularly striking when it comes to foreign direct investment (FDI). In 2024, Bangladesh attracted only $1.5 billion in FDI, equivalent to just 0.33% of GDP, while Vietnam secured $20.2 billion, amounting to 4.2% of GDP. Over the preceding 24 years, Bangladesh’s FDI increased by 5.4 times, whereas Vietnam’s rose by 15.6 times. During 18 of those 24 years, Bangladesh was governed either by the Awami League under Sheikh Hasina or by the military-backed caretaker administration that emerged after the 1/11 political crisis.

Another statistic illustrates the disparity. Bangladesh recorded its highest-ever FDI inflow in 2015, when it received $2.83 billion. By comparison, Vietnam attracted a combined $38.67 billion in FDI in just two years—2023 and 2024.

Recently, Australia-based Bangladeshi investor Robin Khuda announced plans to invest $30 billion in data-centre projects across India by 2030. Following the announcement, discussions began about his personal background and motives. Yet any investor, whether in their homeland or abroad, will naturally prioritise the security and profitability of their investment. Few investors would be eager to invest in a country where, beyond earning profits, they may have to pay political leaders, local strongmen, cope with unreliable electricity, endure disruptions caused by strikes, or face security concerns such as the 2016 terrorist attack at the Holey Artisan Bakery in Dhaka’s Gulshan district.

Budget and the Expectations of a Democratic Journey

As someone born in Bangladesh, Robin Khuda undoubtedly retains emotional ties to his homeland, along with family, friends and educational connections. Through his own knowledge and hard work abroad, he has built substantial wealth. Although he has investments in various countries, the fact that he prefers investing in India rather than Bangladesh should prompt policymakers to reflect seriously on the country’s investment climate. Patriotic sentiment may inspire people to sing “Amar Sonar Bangla, Ami Tomay Bhalobashi” (“My Golden Bengal, I Love You”) or “O Amar Desher Mati” (“O Soil of My Country”), and even sacrifice their lives. Yet few are willing to see their own wealth—or even their father’s wealth—lost through corruption and misappropriation. As a saying from the Hebrew Bible suggests, a person may forgive the killer of his father but not the one who steals his father’s property. Therefore, Robin Khuda cannot be blamed for seeking a safer environment for his investments.

Nor is he the only example. Wealthy Bangladeshi-American entrepreneur Dr Kali Pradip Chowdhury, whose KPC Group has investments in power generation, biotechnology, education, healthcare, hospitality, real estate and tea plantations across several countries, also sought to invest in Bangladesh around a decade ago. He proposed a $4 billion project in Purbachal, including a 142-storey “Iconic Tower” and a sports complex. However, the project never materialised. Frustrated by bureaucratic obstacles, he later remarked that despite meetings with senior government officials, his dream project remained unrealised. The status of his other Bangladesh-focused plans remains uncertain.

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According to the World Bank’s Business Ready (B-READY) Index 2024, Bangladesh ranked 29th among 50 countries, while its predecessor, the Doing Business Report 2020, placed Bangladesh 168th out of 190 countries. The indicators used in these assessments consistently highlight weaknesses in governance, public service delivery, regulatory frameworks and the overall investment environment.

If these realities fail to inform our understanding of the economy, and if expensive infrastructure projects such as the Padma Bridge, metro rail, tunnels and expressways are used merely to create an illusion of progress, meaningful development will remain elusive. The collapse of the political confidence built around such megaprojects serves as evidence of this risk. Consequently, even if future budgets allocate several times more than current spending levels, the likelihood of escaping the country’s economic difficulties remains limited.

This situation did not emerge overnight. Throughout the twentieth century, many countries in Asia and Africa gained independence from colonial rule. But does independence automatically guarantee prosperity or development? Independence provides the right to self-government, protection of fundamental human rights and the rule of law. Yet newly independent nations often struggle because those who assume power frequently lack governing experience. Public expectations are immense, and when governments fail to meet them, frustration grows. In the absence of effective institutions, corruption and plunder can become commonplace.

Bangladesh was no exception. During its early years, international aid intended to rebuild the war-ravaged country, feed the hungry and shelter the homeless often disappeared through corruption. The problem became so severe that then US Secretary of State Henry Kissinger famously described Bangladesh as a “bottomless basket.” More than five decades later, critics argue that the country remains a bottomless basket in a different form. Successive governments and influential individuals associated with them have allegedly looted banks and transferred national wealth abroad. Unless this trend is reversed, ever-expanding budgets alone cannot guarantee development.

The essential conditions for development remain unchanged: political stability, infrastructure development, expanded education and healthcare, and the establishment of the rule of law. The success of any government ultimately depends on its ability to ensure these foundations.

The writer is a senior Bangladeshi journalist based in the United States