Bangladesh to unveil Tk790,000cr national budget on 2 June amid economic challenges

The interim government is set to unveil a Tk790,000 crore national budget for the 2025–26 fiscal year on 2 June, a defining moment for Bangladesh as it navigates mounting economic pressures and charts a course for stability and growth.

This will be the first budget to be presented by the newly installed appointed administration, which faces the daunting task of curbing persistent inflation, reinvigorating private investment and strengthening social safety nets amid global and domestic uncertainties.

Finance Adviser Salehuddin Ahmed will deliver the budget speech in a pre-recorded broadcast scheduled for 4pm on Bangladesh Television (BTV) and Bangladesh Betar.

Private television channels and radio stations have been requested to air the speech simultaneously, using BTV's official feed.

In contrast to previous years, the proposed budget is Tk7000 crore lower than the current fiscal year's allocation of Tk797,000 crore.

According to finance ministry officials, this reduction aligns with a strategy for fiscal consolidation, ensuring a more implementable and efficient financial plan.

The projected budget deficit stands at Tk226,000, down from Tk256,000 in the current fiscal year, representing 3.62% of the GDP.

To bridge this gap, the government will depend on foreign borrowing, bank loans, and savings certificates.

An ambitious GDP growth target of 5.5% has been set for FY26, slightly higher than the revised 5.25% for the current year. But, international financial institutions, including the World Bank, IMF and ADB, predict growth will remain below 5%.

Inflation control remains a priority, with the government aiming to bring it down to 7%. However, economists warn that persistent inflationary pressures could pose risks to achieving this target.

To alleviate the financial strain on lower-income groups, the budget includes an expansion of social safety net programs, increasing both beneficiary numbers and allowance amounts.

Key sectors prioritised for funding include agriculture, health, education and technology.

The Annual Development Programme (ADP) allocation is projected at Tk230,000 crore, a reduction from Tk265,000 crore in the current fiscal year, signifying a more focused investment approach.

Salehuddin Ahmed has assured that the upcoming budget will be business-friendly, introducing tax policies designed to enhance investment, GDP growth and job creation.

The revenue collection target for FY26 is set at Tk518,000 crore, up from Tk480,000 crore in the current fiscal year. But, the IMF has recommended a more aggressive target of Tk580,000 under its reform agenda.

Non-development expenditures will rise, with major allocations earmarked for debt servicing, food subsidies, and banking sector reforms.

The non-development budget is expected to reach Tk560,000 crore, an increase of Tk28,000 crore compared to the current fiscal year's allocation.

The government also plans to strengthen the banking sector with a dedicated allocation to cover the capital shortfall of state-owned banks. Besides, subsidies for agriculture, fertilisers, and electricity will continue to support key industries.

As anticipation builds for the budget announcement, public sentiment is mixed—hopeful about stronger social safety nets and inflation control, yet wary of implementation challenges.

Economists caution that without structural reforms and effective execution, the budget's ambitious goals may be difficult to achieve.

They advocate for enhanced wealth taxation and improved enforcement mechanisms to broaden direct taxation and minimize dependence on regressive indirect taxes.

The budget presentation by Finance Adviser Salehuddin Ahmed will be closely scrutinised, as it is expected to shape Bangladesh's economic recovery and growth in the post-uprising political transition era.