Dhaka, June 12 -- The government has proposed developing a municipal bond framework to finance local government and urban infrastructure projects, opening up a potential new source of long-term funding outside the banking sector.

Experts have broadly welcomed the idea but say significant institutional and financial challenges must be addressed before it can be rolled out on a large scale.

Presenting the FY2026-27 budget in parliament on Thursday, Finance Minister Amir Khosru Mahmud Chowdhury outlined a series of measures aimed at building a sustainable financial system.

To create alternative sources of long-term financing, the government will expand the corporate bond market and formulate a framework for issuing municipal bonds to supp...