Foreign loans to cover 64pc of budget deficit

Finance Minister Amir Khasru Mahmud Chowdhury has set a target of increasing borrowing from foreign sources to cover the deficit between income and expenditure in the new fiscal year. Under the budget plan, net foreign borrowing will be nearly double what was received in the last fiscal year.

The finance minister presented a proposed budget of Tk 9.38 lakh crore for the 2026-27 fiscal year in the National Parliament on Thursday afternoon, June 11. He expects to generate Tk 6.95 lakh crore in revenue, leaving a deficit of Tk 2.43 lakh crore, equivalent to 3.6 per cent of GDP.

To cover this deficit, the government plans to borrow Tk 1.55,850 crore from foreign sources, representing 2.28 per cent of GDP. This means that during this time of crisis, 64.13 per cent of the total deficit will be financed through foreign loans.

Of this amount, Tk 46,000 crore will be spent on repaying instalments and interest on previously taken loans. The net foreign borrowing will stand at Tk 1.09,850 crore, which is 89.4 per cent higher than the revised net foreign borrowing of the outgoing fiscal year.

The original budget for the outgoing fiscal year had set foreign borrowing at Tk 1.35,000 crore, which was later revised down to Tk 95,000 crore. After deducting instalments and interest, net foreign borrowing stood at Tk 58,000 crore.

In his budget speech, the finance minister said the budget has been formulated prioritising economic stability, investment, production, employment, and building an equitable society. "The core philosophy of this budget is to achieve stable economic growth with the goal of becoming a trillion-dollar economy by 2034 by ensuring financial recovery and welfare of the people through economic democratisation."

The finance minister has set a target of covering the remaining deficit by borrowing Tk 1,27,000 crore from domestic sources, including Tk 1,18,000 crore from the banking sector, Tk 8,500 crore from savings certificates, and Tk 15,000 crore from non-bank financial institutions.