Interim govt unveils national budget of Tk7.90 lakh crore for FY2025-26; first budget cut in history

For the first time in Bangladesh's history, the government has proposed a cut in the national budget's absolute size, setting the size at Tk7.90 lakh crore for FY2025-26 – which is 0.9% lower than the current fiscal year's outlay of Tk7,97,000 crore.

This breaks a decades-long trend of year-on-year budget growth that began in FY1972-73.

"This year's budget is somewhat exceptional. For the first time in the country's history, we are proposing a smaller budget for the next fiscal year than the budget of FY2024-25. Moving away from a growth-centric concept, we have tried to emphasise the concept of holistic development," Finance Adviser Salehuddin Ahmed said while presenting the budget via a pre-recorded speech telecast today (2 June).

He continued, "Therefore, instead of highlighting the traditional physical infrastructure development, we have given priority to the people in this year's budget.

"Without ensuring the essential elements of guarantee of fundamental rights, necessary measures for good living, security of livelihood and environment free from discrimination, any state becomes ineffective, and the foundation of a society is weakened. Considering this, in this year's budget, special emphasis has been laid on education, health, good governance, civic facilities, employment etc."

Besides, he added that realising the benefits of the Fourth Industrial Revolution, preparing for the post-LDC graduation period, mitigating the risks of climate change and ensuring sustainable development have been given appropriate priorities.

The proposed budget also accounts for just 12.65% of GDP, marking the lowest budget-to-GDP ratio in 15 years. The last time it fell this low was in FY2010-11, when it stood at 12.52%.

For FY2024-2025, the then government had set the initial budget at Tk7,97,000 crore. Today, it was revised to Tk7.44 lakh crore.

Finance ministry officials say the 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%.

Usually, the size of a new budget increases by 10% to 12% compared to the current year's budget. Last year, it had increased by less than 8%.