The government’s austerity drive, introduced to ease economic pressure and restore fiscal discipline, appears to be losing momentum as spending priorities raise questions over the effectiveness of expenditure controls.
The BNP-led government under Prime Minister Tarique Rahman announced austerity measures soon after taking office, citing financial pressure, revenue challenges and the need to reduce unnecessary spending. However, several decisions since then have created doubts over whether the policy is achieving its objectives.
For the 2026-27 fiscal year, the finance ministry issued a circular directing ministries, departments and state institutions to control spending under both operating and development budgets.
The circular restricted or suspended expenditure in areas including new vehicle purchases, foreign travel, land acquisition and construction of new government buildings. The restrictions covered government offices, semi-government institutions, autonomous bodies, state-owned enterprises and public sector corporations.
However, critics argue that the government’s own decisions have weakened the credibility of its austerity message.
The administration had earlier indicated that it would form a smaller cabinet to reduce costs. Instead, the current cabinet has become one of the largest in Bangladesh’s history, with 26 ministers, excluding the prime minister, and 24 state ministers. Several advisers also hold ministerial or state ministerial status with related benefits.
Critics say expanding positions carrying ministerial privileges contradicts the government’s stated objective of reducing expenditure. Government insiders, however, argue that administrative structures must be determined by governance requirements rather than only cost considerations.
The government also faced criticism after reversing a decision to reduce vehicle maintenance allowances for senior officials. The prime minister had lowered the allowance from Tk50,000 to Tk25,000, but the decision was later withdrawn.
Questions were also raised after Zahed Ur Rahman, policy and strategy adviser to the prime minister, said discussions had begun over purchasing fighter jets from China if funds were allocated in the national budget.
Although defence spending is linked to national security considerations, critics questioned whether such plans align with a period of economic pressure and calls for spending restraint.
Asked whether the austerity policy was producing results, Finance Secretary Md Khairuzzaman Mozumder told TIMES that an assessment would be required.
“I will have to examine it to say whether it is working or not,” he said.
Towfiqul Islam Khan, additional research director at the Centre for Policy Dialogue, said successive governments have introduced austerity measures during periods of economic pressure, but some decisions were later reversed.
“We have seen that in some cases they took austerity measures and then had to go back and withdraw those decisions,” he said.
He said effective expenditure control requires more than issuing circulars.
“Maintaining fiscal discipline requires not only announcing restrictions but also ensuring proper monitoring and implementation,” he said.
Austerity measures are not new in Bangladesh, with previous governments also adopting similar policies during periods of economic stress. Economists have long pointed out that budget implementation often faces challenges due to revenue shortfalls, changing economic conditions and political commitments.
Towfiqul Islam Khan acknowledged that the current government has taken visible steps to control expenditure.
“The current government has visibly taken several measures to keep expenditure within a limited framework and bring discipline. There is no doubt about that, and there is no scope to deny it,” he said.
