The next budget may be slightly smaller than the current fiscal year’s, but non-development spending is expected to rise by over 5 percent due to higher debt servicing costs, food subsidies, and a special allocation for bank reforms.
The government and the International Monetary Fund are set to meet again today for another round of negotiations over the release of the fourth and fifth tranches of a $4.7 billion loan programme.
The plan comes as $42.85b foreign funds remained unused at start of current FY
Led by Finance Adviser Salehuddin Ahmed, the Bangladesh delegation held a series of meetings with IMF representatives in Washington.
The International Monetary Fund has no major disagreement with Bangladesh over reforms to the National Board of Revenue, one of the conditions set by the lender for the fourth and fifth instalments of the $4.7 billion loan.
The United States Trade Representative (USTR), the US government’s chief trade negotiation body, wants to see Bangladesh’s work plan on narrowing the bilateral trade gap before the Trump administration makes a call on reciprocal tariffs.
The fourth tranche of the instalment was deferred due to disagreements and now talks are going on to release two tranches at once.
Bangladesh is confronting a potential rise in poverty and inequality as stubborn inflation, job losses and a slowing economy erode household welfare, according to a World Bank report.
The government is set to install roadside monitoring stations at 24 locations in Dhaka and Chattogram to curb air pollution caused by motorised vehicles, with technical and financial assistance from Japan.
The government’s revenue collection and spending targets for fiscal year (FY) 2025-26 have been set in line with the recommendations of a taskforce given the task of developing strategies to boost the economy, according to the finance ministry.
The new target has raised eyebrows, given the underwhelming performance in revenue collection so far
The interim government may backtrack from its initial plan to set an ambitious GDP growth target of 6 percent for the next fiscal year amid the new economic reality and settle for 5.5 percent.
The subsidy allocation for the power sector is not going down anytime soon as the interim government does not plan to increase electricity prices on inflationary fears.
The Asian Development Bank is likely to increase its loan commitment to Bangladesh by 67 percent to $2 billion this year, up from $1.2 billion in 2024, and offer additional financing by partially canceling funds from long-delayed projects.
Bangladesh’s economy started showing signs of a turnaround in the second quarter of the fiscal year, official statistics show, although economists caution that Trump’s tariff measures are likely to slow down the momentum.
Bangladesh received a record $3.29 billion in remittances in March -- the highest monthly figure to date -- marking a 65 percent year-on-year surge.
Bangladesh’s vulnerability to natural disasters has placed significant strain on its economy and financial resources, with about $5 billion needed in the short term for relief and early recovery, according to the International Monetary Fund.
The interim government aims to balance macroeconomic stability, inflation control, and 6 percent GDP growth in the next fiscal year’s budget, when the 13th parliamentary election is expected.
