After several years of ongoing economic pressure and a change in government following a mass uprising in August, the country’s economy is now facing new challenges.
Aiming to address these, Finance Adviser Dr Salehuddin Ahmed will present the first budget (2025–26 fiscal year) of the interim government at 3pm on Monday on Bangladesh Television.
The government has repeatedly said that this year’s budget will be contractionary. The total size of the 2025–26 budget has been set at Tk7,90,000 crore, which is Tk7,000 crore less than the current 2024–25 fiscal year’s budget.
Officials say that in the upcoming fiscal year, the government will have to face several major economic challenges.
It is understood that while finalizing the budget for the 2025–26 fiscal year, the Ministry of Finance identified several primary economic challenges.
Tackling these challenges amid political uncertainty and sluggish economic activity is considered extremely important for the government.
The challenges
According to sources at the Ministry of Finance, to implement the announced budget for the new year, the government will have to confront 12 economic challenges. These are:
- Controlling inflation
- Revenue collection
- Ensuring domestic and foreign investment
- Securing foreign aid
- Ensuring food and energy security
- Developing skilled manpower and increasing employment
- Ensuring socio-economic security
- Enhancing industrial production capacity
- Improving the business and investment climate
- Restoring discipline in public administration
- Strategies to recover laundered money
- Preparing for LDC graduation
Officials mention that the country’s economy is going through various pressures—stagnant investment, rising unemployment, declining growth, foreign trade tensions, and increasing non-performing loans. Political instability has thrown the economy into this state, they say.
Economists believe that coordinated policies and political stability are essential to address these challenges.
Inflation, employment, quality of life, health, education, and social protection will receive additional attention in budget expenditures this year.
The budget deficit for the 2025–26 fiscal year may be around Tk2,26,000 crore. Similar to past political governments, more than half of this deficit is planned to be financed through foreign sources, with the rest borrowed from banks and national savings schemes.
The allocation for operating or non-development expenditure may be around Tk5,45,000 crore.
The development expenditure for the upcoming fiscal year may be around Tk2,45,000 crore, with Tk2,30,000 crore allocated to the Annual Development Programme (ADP). GDP growth is expected to be set at 5.5%.
Additionally, Finance Adviser Dr Salehuddin Ahmed may announce a plan to reduce inflation to 6.5%.
The national election is expected to be held within the upcoming fiscal year. In this context, the new budget may allocate Tk2,080 crore for the polls.
However, the Election Commission had requested Tk5,922 crore for both national and local government elections for the upcoming fiscal year.
Officials have mentioned that a disciplined administration is crucial for running regular government functions and implementing the budget. Government employees across the country, including those at the Secretariat, are protesting to press for various demands.
Bringing them back to work is a major challenge for the government.
Rising inflation has made everyday life difficult for the general population. Controlling the prices of essential commodities and maintaining people’s purchasing power will also be a major challenge for the government in the upcoming budget.
Creating a favourable business and investment environment is necessary to attract both domestic and foreign investment. Eliminating political uncertainty and reducing bureaucratic complexities can help in this regard, experts say.
Ensuring food and energy security is a fundamental need. Given global market volatility and the impacts of climate change, this remains an ongoing challenge. The upcoming budget needs to include clear directives on this matter, according to experts.
Besides, every year, a large youth population enters the labour force. Transforming them into skilled manpower and creating sufficient employment opportunities are vital for the economy. This is crucial not only for economic growth but also for social stability, and the policies adopted in the upcoming budget will determine the future outcome. For these reasons, this is also a challenge in the upcoming budget.
Strengthening the social safety net for the poor and marginalized population is essential. Ensuring their protection during economic hardship and natural disasters is one of the government's key responsibilities. Therefore, experts say, the upcoming budget must contain guidance on this.
Sufficient revenue collection is essential for covering government expenditures and implementing development projects. The key to addressing this challenge lies in reforming the tax system, preventing tax evasion, and making the revenue collection process more efficient.
To attract domestic and foreign investment, creating a favourable business and investment climate is critical. Political stability and reducing bureaucratic red tape can help in this regard.
Meanwhile, the process of graduating from LDC to a developing country is ongoing. Addressing the challenges of this transition requires adopting the right policies and strategies and enhancing institutional capacity.
Enhancing industrial production capacity is a major driver of economic growth. Strengthening the industrial sector by ensuring access to power, energy, and infrastructure is part of this challenge.
Deviating from traditional procedures, this year Finance Adviser Dr Salehuddin Ahmed will present the FY26 national budget in a recorded format on Bangladesh Television.
According to the Ministry of Finance, after a special cabinet meeting at 9:30am, the president, Mohammed Shahabuddin, was to sign the approved budget.
Afterwards, the Finance Adviser will take the budget documents to the BTV office in Rampura.
Finance Ministry sources state that the day after the presentation, Salehuddin Ahmed will hold a press conference at the Osmani Memorial Auditorium in the capital. At the press conference, he will answer various questions from journalists regarding the budget.
Since parliament is not active, this year the government will collect budget-related opinions directly from citizens. Any citizen of the country can send their feedback to the Ministry of Finance.
The feedback that can be incorporated will be compiled and presented in a June 23 Cabinet meeting for final approval.
After Cabinet approval, it will be promulgated as a presidential ordinance. It will take effect on July 1.
Previously, Dr Debapriya Bhattacharya, fellow of the private research organization Centre for Policy Dialogue (CPD), commented on the upcoming budget: “Unfortunately, this year’s budget is also going to be conventional. There is nothing new, such as recovering defaulted loans, repatriating laundered money, or expanding the tax base. So, there will be no surprises in this budget. “
He added: “The projects currently under the government's consideration are overestimated. About 40% of the expenditure in these projects is fake. The projects that caused losses in the past are still ongoing.”
Debapriya suggested recovering funds lost through corruption, bank fraud, tax evasion, and money laundering during previous governments.
According to him, if this money is recovered and incorporated into the budget, it could serve as an innovative source for this year’s budget.
Meanwhile, Finance Adviser Dr Salehuddin Ahmed earlier said: “The new fiscal year’s budget will be highly realistic. We will not undertake large mega projects on loans under the Annual Development Program (ADP). We will not implement the budget by borrowing from banks or printing new money.”