Reza Mahmud :
In a historic move, the government has proposed a national budget of Tk7.90 lakh crore for the fiscal year 2025-26 – a reduction of 0.9 per cent from the current fiscal year’s outlay of Tk7.97 lakh crore. This marks the first time in Bangladesh’s history that a national budget has been scaled back compared to the previous year.
“This represents a significant shift from the decades-long tradition of year-on-year budget expansion, which began in FY1972-73,” said Finance Adviser Dr Salehuddin Ahmed while presenting the budget via a pre-recorded speech broadcast on Monday.
Describing the move as “somewhat unprecedented,” Dr Ahmed explained: “For the first time in our history, we are proposing a smaller budget than the one allocated for FY2024-25.”
He noted that the government has moved away from a solely growth-centric framework, adopting a more holistic development approach. “Rather than focusing on conventional physical infrastructure projects, this year’s budget puts people at the centre,” he said.
“A state cannot function effectively, nor can a society remain resilient, without ensuring fundamental rights, quality of life, secure livelihoods, and an inclusive environment,” he added. Accordingly, the budget prioritises key sectors such as education, healthcare, good governance, civic amenities, and employment.
The Finance Adviser also highlighted strategic priorities including readiness for the Fourth Industrial Revolution, a smooth transition following LDC graduation, climate risk mitigation, and the pursuit of sustainable development.
Notably, the proposed budget amounts to just 12.65 per cent of GDP – the lowest budget-to-GDP ratio in the past 15 years. The last time this ratio dropped to such a level was in FY2010-11, when it stood at 12.52 per cent.
While the initial budget for FY2024-25 had been set at Tk7.97 lakh crore, it has since been revised down to Tk7.44 lakh crore. According to finance ministry officials, the reduction forms part of a broader fiscal consolidation strategy aimed at establishing a more realistic and implementable financial framework.
The projected budget deficit has been cut to Tk2.26 lakh crore, down from Tk2.56 lakh crore in the current fiscal year. This now accounts for 3.62 per cent of GDP. To bridge the deficit, the government plans to rely on a combination of external loans, bank borrowing, and national savings instruments.
Despite the reduced outlay, the government has set an ambitious GDP growth target of 5.5 per cent for FY2025-26 – slightly up from the revised 5.25 per cent for the current year. However, major international financial institutions including the World Bank, IMF, and ADB have projected that actual growth will likely remain below 5 per cent.
Traditionally, annual budgets in Bangladesh tend to increase by 10-12 per cent year-on-year. However, the previous budget saw a more modest rise of less than 8 per cent, setting the stage for this year’s contraction.
