The government has decided to significantly increase its reliance on domestic sources, particularly bank loans, to finance the budget deficit for the upcoming 2025- 26 fiscal year.
The proposed national budget slashes borrowing targets from foreign sources and savings certificates, instead aims to collect Tk 1.04 lakh crore from the local banking sector, marking an almost 5 per cent increase from the revised target of Tk 99,000 crore in FY25, reports UNB.
The budget for FY26 was presented by Finance Adviser Salehuddin Ahmed in a pre-recorded televised address on Monday. The fiscal year begins on 1 July 2025.
According to the budget presentation, the total budget deficit for the upcoming fiscal year is projected to be Tk 2.21 lakh crore. Of this, 47 per cent is planned to be covered through bank borrowing, an increase from 44 per cent in the last fiscal year.
In the first ten months of the current fiscal (up to May 12), the government’s net bank borrowing stood at Tk 56,116 crore, which is 56.68 per cent of the revised target. Officials note that the net borrowing will remain within the set limit by the end of the current fiscal year.
Conversely, the target for foreign borrowing has been reduced.
As per the proposed budget, the interim government plans to borrow Tk 96,000 crore from external sources in FY26, which is approximately 8.2 per cent lower than the revised target of Tk 1.04 lakh crore for the current fiscal.
Similarly, the government has trimmed its borrowing plans from national savings certificates. The target for the new fiscal is set at Tk 12,500 crore from this sector, a 10.7 per cent reduction compared to the current year’s revised target.