From the Rubble of “Looting”: A Budget of a New Journey

At a time when ordinary citizens return from the market with empty hands and heavier sighs after failing to balance household expenses, the government has placed before parliament the national budget for FY2026–27. Officials describe it as more than a financial statement—it is a “roadmap for economic reconstruction.”

The budget was presented by Finance Minister Amir Khasru Mahmud Chowdhury, who framed it as a break from what he called years of mismanagement, corruption, and capital flight. His speech carried a strong political undertone, repeatedly contrasting “past failures” with the promise of a “new journey from the ruins.”

At its core, the government argues, the budget is not merely about income and expenditure. It is positioned as a policy document aimed at ensuring a “secure, prosperous and dignified life” through economic recovery, accountability, investment revival, and job creation.

Big Numbers, Bigger Pressure

The proposed budget stands at Tk 9.38 trillion. Of this, Tk 6.95 trillion is expected from revenue collection, leaving a deficit of Tk 2.43 trillion, equivalent to 3.6% of GDP.

To bridge this gap, the government plans to rely heavily on external borrowing. A total of Tk 1.5585 trillion is expected from foreign sources, equivalent to 2.28% of GDP. This means nearly 64% of the deficit will be financed through external debt.

However, Tk 460 billion of this borrowing will be used simply to service existing loans—interest payments and principal repayments—raising concerns about the growing debt cycle. Net foreign borrowing is projected at Tk 1.0985 trillion, nearly 89.4% higher than the revised figure of the previous fiscal year.

Domestic borrowing is also set to rise significantly, with Tk 1.27 trillion planned from internal sources. The banking sector alone is expected to provide Tk 1.18 trillion, placing considerable pressure on liquidity in the financial system.

Inflation Fight and Growth Ambitions

The government has set an inflation target of 7.5%, down from a peak of 11.66% recorded in July 2024, according to the budget speech. The task ahead is widely seen as difficult, given persistent price pressures and supply-side constraints.

Economic growth is projected at 6.5% for the next fiscal year, with an ambitious long-term vision of reaching 8.5% growth by 2030–31 and transforming Bangladesh into a trillion-dollar economy by 2034.

Economists, however, remain cautious. Many argue that without a revival in private investment, banking sector stability, and stronger revenue mobilization, these targets may remain aspirational rather than achievable.

Sectoral Priorities and Structural Pressures

The budget outlines 10 key priority areas, including inclusive development, quality education and healthcare, universal social protection, investment-led growth, business-friendly reforms, energy security, ICT expansion, environmental management, and transparent governance.

At the same time, the speech acknowledged a difficult economic reality: high inflation, a weak banking sector, a low tax-to-GDP ratio, stagnant investment, and financial sector irregularities that have long weighed on the economy.

The banking sector, in particular, was flagged as a major concern, with rising non-performing loans, liquidity stress in several institutions, and declining depositor confidence. The capital market was also described as fragile and underperforming.

External Risks and Uncertain Outlook

The budget also highlighted global uncertainties, including conflicts in the Middle East, rising energy prices, and volatility in LNG and fertilizer costs. These external shocks could further strain Bangladesh’s import-dependent economy.

Despite these challenges, the overall tone of the budget remains optimistic. The government aims to reduce inflation to 5% in the medium term, strengthen investment levels, and shift from debt-driven growth to a production- and employment-led economic model.

Winners, Losers, and the Political Message

Infrastructure, energy, ICT, and social protection sectors are expected to benefit from increased allocations. These areas are likely to see stronger government support and continued expansion.

On the other hand, the banking sector faces mounting pressure due to heavy government borrowing. Financial institutions, already strained by liquidity challenges, may experience further stress as public sector demand for funds rises.

Businesses have welcomed the pro-investment rhetoric, but remain cautious about implementation risks, regulatory stability, and financing constraints.

The political message of the budget is unmistakable. It combines sharp criticism of the past with bold promises of reform. Yet economists note that the real test lies not in parliamentary speeches but in implementation on the ground.

This budget is both a declaration of renewal and a reflection of persistent structural weaknesses. It carries ambitious targets, large numbers, and strong political messaging—but also significant risks.

Ultimately, its success will not be measured in parliament or policy documents, but in markets, banks, factories, and in the daily lives of citizens trying to make their monthly household budgets balance.