The interim government is set to present a Tk 790,000 crore national budget for the 2025–26 fiscal year on Monday, amid intense economic pressures, fragile political stability, and growing calls for structural reform.
This will be the first fiscal plan presented by the technocratic administration installed in August 2024, following the fall of the Sheikh Hasina-led Awami League government during a mass uprising.
Finance Adviser Salehuddin Ahmed will deliver the budget speech in a pre-recorded broadcast at 4pm on state-run Bangladesh Television (BTV) and Bangladesh Betar, with all private television and radio stations instructed to carry the official feed.
The upcoming budget is being framed against a backdrop of economic turbulence and institutional transition. The country continues to struggle with the consequences of global supply shocks, a depreciating taka, sluggish foreign exchange reserves, and weakened public confidence in financial governance.
Though unelected, the interim government faces the monumental task of restoring economic stability, stimulating investment, and addressing runaway inflation while maintaining fiscal responsibility.
The planned budget is marginally lower than last year’s Tk 797,000 crore, reflecting an emphasis on fiscal consolidation. Officials at the finance ministry say this trimming aims to ensure better execution and reduce inefficiencies, particularly following years of underwhelming revenue performance and sluggish development project implementation.
Growth ambitions meet fiscal gaps and inflation risks
The government has set a 5.5% GDP growth target for the upcoming fiscal year beginning on July 1, slightly higher than the revised 5.25% for the current year.
Yet, global financial institutions and development partners such as the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB) remain cautious, expecting growth to remain below 5% due to persistent structural weaknesses, low investor confidence, and uncertain export prospects.
The budget deficit is projected at Tk 226,000 crore, or 3.62% of GDP, a decrease from the current year’s Tk 256,000 crore. To fund the gap, the government will rely on a combination of foreign borrowing, domestic bank loans, and savings certificates.
Meanwhile, the revenue target has been raised to Tk 518,000 crore, though the IMF has pushed for a more aggressive target of Tk 580,000 crore, citing the need for stronger tax reforms and compliance enforcement.
Inflation, which has remained above 9% throughout the year, is projected to drop to 7% in the next fiscal year.
However, this goal faces headwinds from upcoming electricity and fuel price hikes required under IMF conditionalities, which are likely to further pressure household budgets and stir discontent, particularly among low- and middle-income groups.
Social spending and sectoral focus amid execution challenges
To cushion the economic blow for vulnerable communities, the budget will expand social safety net programmes, increasing both the number of beneficiaries and the size of allowances.
This move follows rising inequality and mounting public frustration over food prices and job stagnation. Still, concerns remain over the capacity to implement these programmes effectively, as previous initiatives have suffered from bureaucratic delays, mismanagement, and politicisation.
Core development priorities for the new fiscal year include agriculture, healthcare, education, and technology—sectors seen as essential for long-term resilience and inclusive growth. The Annual Development Programme (ADP) is being trimmed to Tk 230,000 crore from Tk 265,000 crore, reflecting a more targeted approach under fiscal constraints.
At the same time, subsidies for fertiliser, electricity, and agricultural inputs will be maintained to safeguard food security and support production continuity in the face of global commodity volatility.
Debt, banks, and structural hurdles weigh on outlook
Non-development expenditure is set to rise to Tk 560,000 crore, driven largely by debt servicing obligations, expanded subsidies, and a push to reform the troubled banking sector.
A significant allocation will go towards recapitalising state-owned banks, which are burdened by non-performing loans and governance deficiencies. Under IMF guidance, the government is also preparing a reform roadmap aimed at improving regulatory oversight and stemming systemic financial risks caused by chronic loan rescheduling and poor asset quality.
While the finance adviser has promised a business-friendly tax regime to stimulate investment and job creation, experts remain sceptical.
Many warn that without deeper structural reforms—such as wealth taxation, digital enforcement systems, and a pivot away from regressive indirect taxes—the government will struggle to meet its revenue targets or achieve fiscal sustainability.
Years of stalled tax modernisation efforts have weakened the state’s capacity to raise funds efficiently and equitably.
A pivotal test for governance and economic recovery
The coming fiscal year will present formidable challenges beyond the numbers. Energy supply instability remains a concern amid dollar shortages and delayed payments to LNG suppliers.
The country’s export engine, especially the garment sector, faces weakening global demand, while urban employment remains stagnant.
Public sentiment heading into the budget announcement is a mix of cautious optimism and deep scepticism. While many welcome promises of expanded social protections and targeted sectoral investment, doubts linger over whether the interim government can overcome the institutional inertia and legacy inefficiencies that have plagued past budgets.
As such, the 2025–26 budget will serve as a defining test of the interim administration’s ability to steer the economy through instability and lay the groundwork for recovery.
All eyes will be on Salehuddin Ahmed’s speech—not only for its numbers but for the credibility it lends to the government’s broader reform and stabilisation agenda.