Govt to cut subsidies, increase export and remittance incentives in FY2026-27 budget

The government is set to reduce subsidy allocations while increasing incentives for exports and remittances in the proposed national budget for the 2026-27 fiscal year, reflecting a strategy aimed at easing fiscal pressure and boosting foreign exchange earnings.

According to Finance Ministry sources, total subsidy allocation for the upcoming fiscal year is likely to be set at Tk 89,538 crore, down from Tk 95,031 crore in the revised budget for FY2025-26.

The proposed allocation represents a reduction of nearly Tk 5,500 crore.

The decline becomes more pronounced when compared with actual subsidy expenditure in FY2024-25, when the government spent Tk 108,673 crore. The proposed allocation is nearly Tk 19,000 crore lower than that figure.

Officials said the reduction has been planned on the assumption that global prices of fuel and fertilisers will remain relatively stable in the coming months.

The government also expects that an improvement in the Middle East situation could help lower international energy prices.

In addition, authorities are pursuing a gradual adjustment of gas and electricity tariffs to reduce the burden of subsidies on the national budget.

Subsidies in Bangladesh are primarily provided in the energy, power and food sectors. However, officials acknowledged that part of the agricultural support programme is recorded under social safety net schemes, while some food-related subsidies are distributed across different budget heads, making direct comparisons more complex.

While subsidy spending is being scaled back, the government is moving to strengthen support for export-oriented industries and remittance inflows.

The proposed allocation for export, jute and remittance incentives is expected to rise to Tk 16,025 crore in FY2026-27, compared with Tk 15,225 crore in the current fiscal year, marking an increase of around Tk 800 crore.

Economists say the dual approach of reducing subsidies while expanding targeted incentives could help contain the budget deficit and encourage higher export earnings and remittance inflows, both of which remain critical to Bangladesh's external sector stability.

However, analysts caution that maintaining a balance between fiscal discipline and inflation management will remain a key challenge, particularly amid uncertainties in global commodity markets and domestic price pressures.

The proposed measures are expected to feature prominently in the FY2026-27 national budget, which Finance Minister Amir Khasru Mahmud Chowdhury is set to present in parliament at 3:00pm today (June 11).