The Government Aims For 6% GDP Growth With Smaller Budget of Bangladesh2 min read
Finance ministry officials have already started working on the budget after receiving directives from Chief Adviser Prof Muhammad Yunus. Finance Adviser Salehuddin Ahmed will lead pre-budgetary meetings with various stakeholders, including economists, business leaders, and economic reporters, with the first meeting scheduled for Sunday. These discussions are set to be completed by April. Due to the absence of parliament, the proposed budget for FY26 may be announced through a broadcast. Ahmed stated that no ambitious goals would be set for the upcoming national budget, and the GDP growth target would be set lower than the current target of 6.75% for FY25.
In a discussion last month, officials from the finance ministry presented a draft plan to Prof Yunus, who issued directives for further adjustments to the budget. As a result, the growth target for FY26 will likely be reduced to 6%, while the current growth target for FY25 could be revised down to 5.25%, considering the damage caused by multiple floods and the government’s contractionary monetary policies aimed at curbing inflation. Despite this, the economy is expected to recover next year as the business environment improves.
Read more: Bank Deposits See 8% Growth in January After Months of Sluggish Performance
International financial institutions, such as the World Bank, IMF, and Asian Development Bank, have also forecasted lower growth for FY25, but have projected a rebound for the following year.
Inflation projections for FY26 have been set at 6.5%, higher than the 8% target for the current year but in line with previous forecasts. The budget’s draft size, presented to the Chief Adviser last month, is approximately Tk 8.48 lakh crore, including Tk 2.7 lakh crore allocated for the Annual Development Programmes (ADP). However, the Chief Adviser has directed the finance ministry to further reduce the budget, bringing it closer to Tk 8 lakh crore, with the ADP allocation potentially revised to Tk 2.4 lakh crore.
The original budget for FY25 was Tk 7.97 lakh crore, which was later revised to Tk 7.44 lakh crore by the interim government. The proposed budget for FY26 may be slightly lower than the previous fiscal year’s original budget. While the ADP allocation for FY25 was Tk 2.65 lakh crore, it was revised down to Tk 2.16 lakh crore. Ahmed emphasized that the upcoming ADP allocation would be planned with a pragmatic approach to ensure effective utilization.
With these adjustments, the interim government is focusing on pragmatic financial management while addressing the country’s economic challenges.
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