Finance Minister Amir Khosru Mahmud Chowdhury is set to place a Tk9.38 lakh crore budget before parliament on Thursday, unveiling the new BNP government’s first fiscal plan that seeks to translate election pledges of reviving the economy, higher investment, stronger social protection and a pathway towards a $1 trillion economy by 2034 into fiscal arithmetic that economists say stretches beyond current implementation capacity.
At the centre of caution, the budget deficit is set to widen 21.5 per cent to Tk2.37 lakh crore, with financing targets remaining under question.
From the outset, the budget is defined by contrast – an assertive expansionary push on growth, investment and welfare set against a weakening revenue performance, rising debt servicing costs and persistent shortfalls in external financing that have narrowed fiscal space.
The budget targets GDP growth of 6.5 per cent in FY27, up from an estimated 4.14 per cent, and inflation is projected to ease to 7.5 per cent from above 9 per cent, while the Middle East crisis is unlikely to let energy bills ease soon.
Total investment is targeted at 34.5 per cent of GDP, including 21.4 per cent private and 13.1 per cent public investment, sitting against a fragile investment backdrop.
Private sector credit growth has slowed to below 5 per cent, while real private investment has already seen its first decline in 35 years.
Foreign direct investment inflows remain weak, despite diversified efforts to attract capital.
Total public expenditure for FY27 is set at Tk9.38 lakh crore, up 19 per cent from the revised FY26 budget, with development spending rising more sharply.
The annual development programme (ADP) is set at Tk3 lakh crore, a 50 per cent jump from Tk2 lakh crore in the revised budget.
Total development expenditure, including non-ADP components, is projected at Tk3.16 lakh crore, up 47.1 per cent.
The reality is, the government could spend nearly half of the ADP amounts in the first ten months of the current fiscal year.
Revenue mobilisation presents the sharpest structural tension.
The National Board of Revenue is tasked with collecting Tk6.04 lakh crore within a total revenue target of Tk6.95 lakh crore, equivalent to 10.18 per cent of GDP.
The target implies around 20.3 per cent growth over the revised FY26 plan, but officials and economists say likely shortfalls this year mean required underlying growth could exceed 40 per cent.
Policy Exchange Bangladesh Chairman M Masrur Reaz said the assumptions remain difficult under existing institutional constraints.
“Without a massive overhaul of the revenue collection mechanism and significant improvements in services for investors and taxpayers, these targets are most likely to remain unachievable,” he said.
The deficit financing strategy amplifies the imbalance between intent and precedent.
Net domestic borrowing is projected to fall 7.3 per cent to Tk1.27 lakh crore, while net foreign borrowing is set to rise 89.4 per cent to Tk1.1 lakh crore alongside a 23 per cent increase in grants to Tk6,150 crore.
This follows FY26 revisions that lifted domestic borrowing to Tk1.37 lakh crore from Tk1.25 lakh crore after external inflows fell extremely short, with the Tk96,000 crore foreign borrowing target revised down to Tk58,000 crore this fiscal year.
Amid questions over the projected target in external financing, any shortfall could again shift pressure to domestic banking channels, tightening liquidity and crowding out private credit.
Despite expansionary spending, the budget projects a deficit of Tk2.37 lakh crore or 3.55 per cent of GDP, up 21.5 per cent from the revised FY26 level.
Debt servicing continues to compress fiscal space as the country has already begun borrowing to meet revenue expenditures.
Interest payments alone are projected at Tk1.28 lakh crore, while operating expenditure rises 6.7 per cent to Tk6.06 lakh crore, limiting flexibility.
A partial implementation of pay hikes for government employees is also raising operational costs.
Subsidies, incentives and cash support are budgeted at Tk1.17 lakh crore, including Tk37,000 crore for power, Tk27,000 crore for fertiliser, Tk6,500 crore for gas and Tk9,600 crore for food.
Agricultural incentives remain at Tk17,000 crore, export incentives at Tk7,825 crore and remittance incentives rise to Tk7,200 crore from Tk6,200 crore.
The fiscal framework also flags contingent risks, noting that allocations for electricity, liquefied natural gas (LNG) and agriculture may need to rise further if geopolitical tensions in the Middle East push up global energy and commodity prices.
A structural shift is planned in social protection delivery, with gradual replacement of open market sale (OMS), Trading Corporation of Bangladesh (TCB) operations and food-friendly programmes through an expanded family card system.
Sectoral priorities extend across agriculture, energy security, transport, ICT and employment generation as well as the creative, green, blue and sports economies.
Education allocation rises to Tk1,36,606 crore, equivalent to 2 per cent of GDP, from Tk87,206 crore, while health allocation increases to Tk69,409 crore, lifting the sector’s share to 1.01 per cent of GDP. The government has indicated gradual increases towards 5 per cent of GDP for both sectors.
Social protection programmes expand through Family Card, Farmer Card and honorarium schemes for religious institution service providers alongside existing safety nets, with officials saying Family Card systems will gradually replace OMS, TCB sales and food-friendly programmes.
Power and Participation Research Centre Executive Chairman Hossain Zillur Rahman said budgets in Bangladesh reflect a persistent gap between ambition and execution.
“It is a reality that the government has been setting ambitious targets in the budget, but revises them downward amid implementation challenges,” he said.
The new government should ensure the best use of the taxpayers’ money being spent amid a narrowing fiscal space, opined both the economists, stressing for institutional reforms to ensure good governance.
