Staff Reporter :
The national budget for the upcoming fiscal year 2025-2026 (FY26) to be reduced to Tk7.90 lakh crore – a reduction of Tk7,000 crore compared to the original budget of the current fiscal year, the finance ministry has decided.
If this move goes ahead, it will be the first time since the country’s independence that a new fiscal budget is smaller than that of the previous year, according to officials familiar with the development.
The decision was made during a meeting of the Coordination Council on Monetary, Currency and Exchange Rates, chaired by Finance Adviser Salehuddin Ahmed on Tuesday, sources said.
According to officials, the budget cut is driven by several challenges – including underperformance in revenue collection, a decline in foreign loans and grants, and the exclusion of non-essential projects from the annual development programmes.
Finance Division officials noted that the reduction aims to make the budget more “realistic and achievable.”
Sources, requesting anonymity, confirmed that the majority of the cuts are focused on development expenditures.
The allocation for the Annual Development Programme (ADP) for FY26 has been fixed at Tk2.30 lakh crore – a decrease from Tk2.65 lakh crore in the current fiscal year.
Explaining the rationale behind the cut, officials said most mega projects launched under the Awami League administration have already been completed, and the current interim government has decided not to initiate any new large-scale projects.
Additionally, the upcoming year will see a smaller number of development projects, as several politically motivated initiatives from the Awami League era are being cancelled. This will naturally lead to a reduction in development spending.
Despite the overall reduction in budget size, the revenue target for the National Board of Revenue (NBR) is set to increase in FY26.
“The Finance Division is preparing to set a revenue target of Tk5.18 lakh crore for the NBR,” an official stated, although the NBR itself has recommended keeping it within Tk5 lakh crore.
This fiscal year, the NBR’s original revenue target was Tk4.80 lakh crore, but due to significantly lower collections, the target has been adjusted down by approximately Tk50,000 crore in the revised budget.
The projected budget deficit for FY26 stands at Tk2.26 lakh crore.
Officials mentioned that efforts are underway to cap the deficit to reduce reliance on high-interest domestic borrowing.
More than half of the deficit financing is expected to come from foreign sources, with the remainder sourced from banks and national savings instruments.
The Finance Division is also forecasting a GDP growth rate of 5.5% and inflation at 6.5% for the new fiscal year.
In contrast, the original estimates for the current fiscal had projected GDP growth at 6.5% and inflation at 6%. The revised figures, however, put growth at 5.25% and inflation at 8.5%.
