Budget size rises 19pc, govt eyes trillion-dollar economy

Despite economic challenges, global instability and prolonged high inflation, Finance Minister Amir Khasru Mahmud Chowdhury has proposed a national budget of Tk 9,38,000 crore for the 2026-27 fiscal year. The budget has been titled 'Journey towards a Democratic, Humane and Inclusive Economy'.

The proposed budget is nearly 19 per cent higher than the revised budget of the outgoing fiscal year, which stood at Tk 7,88,000 crore. The new budget is equivalent to approximately 13.73 per cent of the country's GDP.

Presenting the budget in the National Parliament, the finance minister said the budget has been formulated focusing on stability, investment, production, employment and an equitable economic system to address the existing weaknesses of the economy and global uncertainties. The government aims to elevate Bangladesh to a trillion-dollar economy by 2034.

The new budget proposes development expenditure of Tk 3,16,075 crore, which is about 47 per cent higher than the revised budget of the outgoing fiscal year. Of this, Tk 3,00,000 crore has been allocated for the implementation of the Annual Development Programme (ADP).

The share of development expenditure in the total budget has been increased to 33.70 per cent, up from 27.27 per cent in the previous fiscal year. Meanwhile, the ratio of non-development expenditure has been planned to be reduced to 66.30 per cent.

Non-development expenditure has been allocated Tk 6,05,740 crore. Of this, interest payments on domestic and foreign loans will account for Tk 1,27,000 crore, which is more than 21 per cent of total non-development expenditure. Additionally, Tk 89,380 crore has been allocated for the salaries and allowances of government officials and employees.

The total revenue collection target in the new budget has been set at Tk 6,95,000 crore, which is about 18 per cent higher than the revised revenue target of the outgoing fiscal year. Of this, the National Board of Revenue (NBR) has been tasked with collecting Tk 6,04,000 crore in taxes. The VAT sector is expected to contribute the highest amount at Tk 2,28,915 crore, followed by income and profit tax at Tk 2,19,835 crore.

The government aims to raise the tax-to-GDP ratio to 10 per cent in the medium term and to 15 per cent by 2035.

The proposed budget projects a deficit of Tk 2,43,000 crore, approximately 3.6 per cent of GDP. The government has maintained the policy of keeping the deficit below 5 per cent in line with international standards.

To finance this deficit, the government will rely on foreign and domestic loans, with plans to borrow Tk 1,55,850 crore from foreign sources and Tk 1,27,000 crore from domestic sources.

GDP growth in the last fiscal year is estimated to have been limited to 4.14 per cent. Inflation in May stood at 9.42 per cent. For the new fiscal year, the government has set targets of reducing inflation to 7.5 per cent and increasing GDP growth to 6.5 per cent.

The finance minister said the government aims to create a new growth trajectory by restoring economic stability, increasing investment, creating employment and reducing the cost of living. The new budget will serve as the roadmap for achieving these goals.