Amid global geopolitical instability, uncertainty in energy markets, high inflation, revenue shortfalls, and pressure in the banking sector, the government is preparing to formulate the national budget for the 2026–27 fiscal year. One of the largest budgets in the country’s history, it has generated high expectations among the public, while also confronting the government with serious economic challenges.
According to sources, the budget session of the 13th National Parliament is likely to begin on June 7 at 3:00 PM. The budget presentation and approval process will be completed in this session. Finance Minister A. H. M. Mustafa Kamal is expected to present a budget of approximately BDT 9.30 trillion, according to the Ministry of Finance and related sources. This is about BDT 1.40 trillion higher than the revised budget of the current fiscal year.
Pressure from Multiple Crises
Officials from the Ministry of Finance say that this year’s budget must take into account multiple global and domestic challenges simultaneously. Geopolitical tensions in the Middle East—particularly the Iran–Israel conflict and broader instability involving the United States—have already disrupted international energy markets. As a result, crude oil prices have increased, raising import costs significantly.
This situation is affecting electricity generation, transportation costs, and industrial production. At the same time, the government remains under pressure to comply with conditions under the loan program of the International Monetary Fund.
Policy makers describe the upcoming budget as both “people-oriented and realistic,” while also acknowledging that it will be one of the most challenging budgets in the country’s history.
Restoring Confidence in the Economy
A key objective of the government is to restore public confidence in the economy. In recent years, high inflation has significantly increased the cost of living. Volatility in essential commodity prices, energy shortages, rising business costs, and instability in the banking sector have all placed considerable strain on the economy.
Policy makers believe that without restoring public confidence and providing relief to citizens, achieving overall economic stability will be difficult.
Revenue Targets and Realities
The proposed budget sets a revenue target of approximately BDT 6.95 trillion. The National Board of Revenue (NBR) will carry the largest responsibility, with a projected target of around BDT 6.04 trillion.
However, economists argue that achieving such an ambitious target may be difficult under current conditions. Revenue shortfalls have already emerged in the first eight months of the current fiscal year. Moreover, the tax-to-GDP ratio remains low compared to many South Asian countries.
To address this, the government is expected to expand the tax base, reduce tax evasion, and identify new revenue sources. Proposed measures include reducing tax exemptions, restructuring the VAT system, and making customs duties more market-oriented.
Pressure on Business and Investment
Finance Minister A. H. M. Mustafa Kamal has emphasized in several meetings that business-friendly policies are essential to revive economic momentum. The private sector is currently under pressure due to banking instability, currency depreciation, and high inflation. Many industries are operating below capacity, which is also slowing job creation.
Expanding Social Protection
Policy-level sources indicate that the upcoming budget will significantly expand social safety net programs. Initiatives such as family cards, farmer cards, old-age allowances, widow allowances, and disability benefits are expected to see increased coverage and allocation.
The number of beneficiaries under the family card program is planned to rise to 4.1 million. Direct financial assistance will be provided to farmers through farmer cards. Allowances for the elderly and widows may also be increased.
While these programs are expected to ease the burden of inflation on low-income groups, they will also place additional pressure on the budget.
Risks of Debt-Driven Financing
The budget deficit is estimated at around BDT 2.35 trillion. To finance this gap, the government plans to rely more on external loans, savings instruments, and the banking sector.
However, economists warn that excessive reliance on borrowing could increase future debt servicing pressures. Interest payments alone may exceed BDT 1.27 trillion in the upcoming fiscal year.
Energy Crisis and Subsidy Pressure
The energy sector remains one of the government’s biggest concerns. Rising global oil prices have increased electricity generation costs, putting additional pressure on energy and power subsidies.
Subsidies for agriculture, particularly fertilizer support, are also expected to continue. However, the International Monetary Fund has been urging a reduction in subsidies, creating policy tension for the government.
Development Spending and Long-Term Goals
The Annual Development Programme (ADP) for the upcoming budget may reach around BDT 3 trillion. Priority sectors include health, education, local government, transport, and infrastructure.
The health sector is expected to receive increased allocations to expand rural healthcare services, improve hospital capacity, and modernize medical infrastructure.
In the long term, the government aims to grow the economy to USD 1 trillion by 2034. Achieving this goal will require major investments in industrialization, exports, technology, and human capital development.
Expert Opinions
Economist Mahbub Ahmed believes that without strengthening revenue capacity, ambitious expenditure plans will be difficult to implement.
Dr. Zahid Hussain argues that resolving the energy crisis and controlling inflation are the most critical challenges facing the economy.
Dr. Fahmida Khatun, Executive Director of Centre for Policy Dialogue (CPD), notes that reducing taxes on essential imported goods could provide short-term relief, but weak market management could limit the benefits. She also stresses the importance of transparency and accountability in social safety net programs.
Conclusion
Overall, the upcoming budget is not merely a financial plan but a strategic attempt to navigate a complex economic reality. Balancing crisis management with development aspirations, the government faces the challenge of designing a budget that stabilizes the economy while offering some relief to the public amid ongoing inflationary pressures and structural constraints.