Record budget, litmus test for BNP govt
After a 19-year absence from power, the BNP-led government faces its first major fiscal litmus test today as Finance and Planning Minister Amir Khosru Mahmud Chowdhury tables what is set to be the largest budget in the country’s history — a Tk 9.38 trillion proposal for fiscal year 2026-27.
The budget, the country’s 55th, will be placed before parliament at 3:00pm, carrying the ambitious theme: “Economic Democratisation and Deregulation: Bangladesh’s Journey towards a Trillion-Dollar Economy.” It will be the first full-fledged fiscal plan of the Tarique Rahman administration, which swept to power with a two-thirds majority in the February 12 general elections.
The last time a BNP-led government presented a budget was under the late Finance Minister M. Saifur Rahman, for fiscal year 2006-07 — making today a moment of symbolic as much as economic weight.
Record size, Record expectations
The proposed outlay of Tk 9.38 trillion — crossing the Tk 9 lakh crore mark for the first time — is 19 per cent higher than this fiscal year’s revised budget. Against that expenditure, the government has set an ambitious revenue mobilisation target of Tk 6.95 trillion, with roughly 90 per cent of the burden falling on the National Board of Revenue (NBR).
The projected budget deficit stands at Tk 2.43 trillion, or approximately 3.55 per cent of GDP — below the internationally accepted ceiling of 5 per cent. To bridge the gap, the government plans to borrow Tk 1.12 trillion from the banking system, raise Tk 150 billion through savings certificates, and draw roughly Tk 1.16 trillion from foreign loans and grants, including about $3 billion in direct budget support.
Notably, this foreign assistance target has been set without any recourse to an IMF loan.
Growth, Inflation and the Hard Numbers
The government has set a GDP growth target of 6.5 per cent for FY2026-27, alongside an inflation target of 7.5 per cent. Both are ambitious given current ground realities. GDP growth has declined for three consecutive years, slipping below 4 per cent last fiscal year — the worst performance since the Covid-19 year of 2019-20. Development partners have forecast that growth will remain below 4 per cent in the outgoing fiscal year as well.
On inflation, the picture is equally challenging. The Bangladesh Bureau of Statistics (BBS) recorded inflation at 9.42 per cent in May, and prices have remained above 9 per cent since 2023.
The revenue outlook adds to the concern. During the first 10 months of FY2025-26, NBR revenue collection stood at Tk 3.27 trillion against a revised target of Tk 4.31 trillion — a shortfall of Tk 1.045 trillion. Next year’s target of Tk 6.95 trillion would require the NBR to increase collections by roughly Tk 200,000 crore over its likely actual collection this year.
Where the money will go
Out of the Tk 6.38 trillion operating budget, approximately Tk 450,000 crore, is expected to be absorbed by interest payments, partial implementation of the new pay scale and subsidies.
The government has approved an Annual Development Programme of Tk 3 lakh crore — 50 per cent higher than this fiscal year — reflecting its electoral pledge to boost public investment. However, implementation capacity remains a persistent concern.
Interest payments alone are expected to reach Tk 1.42 trillion, up from Tk 1.34 trillion in actual spending last year. Subsidies and incentives are pegged at Tk 1.26 trillion.
From the coming fiscal year, the government will begin a phased implementation of the Pay Commission’s recommendations, with 50 per cent of basic pay increases taking effect immediately.
This is expected to cost an additional Tk 35,000 crore in salaries, allowances and pension payments, bringing total allocations in that category to Tk 1.66 trillion.
Education and health — both highlighted in the BNP’s election manifesto — will receive Tk 100,000 crore and Tk 60,000 crore respectively, though economists caution that implementation, not allocation, is the harder challenge in both sectors.
Relief, reform and the creative economy
The Finance Minister is expected to announce a phased increase in the tax-free income threshold — a measure likely to be welcomed by middle-income earners. At the same time, higher earners can expect additional tax burdens as the government looks to broaden the revenue base.
Import duties on fuel and edible oil are expected to be reduced, along with tariff cuts on a range of other goods. Freelancers and entrepreneurs in the digital economy are also in line for significant incentives.
In a new initiative, Chowdhury will formally announce a ‘Creative Economy’ framework, backed by a Tk 500 crore initial allocation — Tk 200 crore from the government and Tk 300 crore from Bangladesh Bank’s CSR fund. The initiative covers film, music, drama, software, design, video games, publishing and allied industries.
Economists and policy observers are watching the budget closely for signs of whether the new government intends to deepen its reform agenda.
“The budget will be closely watched for signals on whether the government intends to continue its reform agenda or not,” said Dr Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD). “Private investment, which has remained depressed, could gain momentum if the budget includes credible measures to stimulate activity.”
He also warned against the rising debt burden. “To manage the situation, there is no alternative to increasing domestic resource mobilisation,” he said. “In the case of new loans, greater emphasis must be placed on project selection, expenditure control, timely implementation and skilful negotiation of loan conditions. Otherwise, the pressure of debt repayment may intensify in the coming years.”
For a government that won power on promises of economic renewal, today’s budget is more than an annual fiscal exercise. It is the first real measure of its ability to translate ballot-box mandate into balance-sheet reality.
