The government has finalized its national budget of Tk 9,38,000 crore for the upcoming 2026"27 fiscal year, prioritising infrastructure-led growth and development acceleration, even as concerns mount over widening fiscal pressures and rising dependence on bank borrowing.
The proposed budget, equivalent to 13.7 per cent of the GDP, marks a significant increase from the revised Tk 7,88,000 crore budget for the outgoing fiscal year, according to the budget document available to this correspondent.
To finance the ambitious spending plan, the government has set a total revenue collection target of Tk 6,95,000 crore, equivalent to 10.2 percent of GDP. The amount of deficit budget will be Tk 2,43,000 in the next national budget, extending a trend of rising fiscal gaps that has increasingly strained the economy.
To bridge the financing gap, the government plans to rely on both external and domestic sources.
Net external financing is estimated at Tk 1,16,000 crore. Tk 5,000 crore is expected in grants.
Domestic borrowing is projected at Tk 1,27,000 crore, with a significant reliance on the banking sector. Of this, Tk 1,12,000 crore will be sourced from banks, while Tk 15,000 crore is expected from non-bank sources such as savings instruments.
Officials with the budget preparation process said the gap between government revenue and expenditure is expected to grow as spending pressures persist despite slower-than-expected revenue collection.
On the expenditure side, operating and other recurrent costs are estimated at Tk 6,33,000 crore, representing 9.2 percent of Gross Domestic Product (GDP). Meanwhile, the Annual Development Programme (ADP) allocation has been proposed at Tk 3,00,000 crore, or 4.4 percent of GDP, aimed at sustaining infrastructure expansion and ongoing development projects. The overall budget deficit is projected at Tk 2,46,000 crore, or 3.6 percent of GDP, slightly higher than the revised 3.3 percent deficit of the previous fiscal year.
The government’s total operation and other expenditures were estimated at Tk 6,30,000, which is 9.2 percent of the total GDP and the annual development programme (ADP) fixed at Tk 3,00,000, which 4.4 percent of the total GDP.
Economists caution that heavy government borrowing from the banking system"exceeding Tk 1.1 lakh crore"may tighten liquidity conditions and crowd out private sector credit, potentially affecting investment and growth momentum.
At the same time, rising debt servicing costs, particularly the Tk 43,000 crore earmarked for foreign loan principal repayments, highlight increasing fiscal pressure from past borrowing cycles.
Analysts note that the success of the budget will largely depend on the National Board of Revenue’s (NBR) ability to achieve the ambitious 10.2 percent of GDP revenue target. Failure to meet this target could widen the deficit further, forcing greater reliance on domestic borrowing and adding pressure on the banking sector.
Economists warn that unless there is a significant improvement in revenue collection and debt-servicing pressures are contained, the actual deficit could become even larger. Excessive borrowing from the banking sector may also crowd out private-sector credit, reducing investment and employment opportunities.
Sources added that the budget deficit has emerged as one of the most pressing challenges for Bangladesh’s economy. Weak revenue collection, rising interest payments on public debt, increasing repayments of foreign loans, and steadily growing development expenditures have continued to widen the gap between government income and spending. Although the interim government has taken steps to contain the deficit in FY2025-26, economists fear it could expand again in FY2026-27.
The government also intends to introduce special funds and incentives to promote the creative economy, including information technology, freelancing, startups, film, music, sports, and rural culture-based industries.
Former Finance Secretary Mahbub Ahmed said that a budget deficit itself is not necessarily a problem; rather, the key issue is how it is financed.
