The interim government is set to slash the development budget for the fiscal year (FY) 2025-26 by 14 percent year-on-year, as it struggles with limited fiscal space and steers away from costly mega-projects.
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.
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.
The government will increase the number of beneficiaries of various social safety net schemes by at least 10 lakh from fiscal year (FY) 2025-2026, but allowances will see a small increase, although poor groups have been facing stubbornly high inflation for years.
Fertiliser subsidy will increase to Tk 28,000 crore in the revised budget, up by 64.7 percent from the original
The interim government is planning to prepare a small budget with a 6 percent GDP growth target for the next fiscal year considering the sluggish economy and low revenue collection.
Revenue collection fell significantly short of the International Monetary Fund’s (IMF) target in the first six months of the current fiscal year, with the floor for the fourth instalment of an ongoing $4.7 billion loan programme proving too ambitious.
For several months, food inflation had also remained in double digits
The total cost of the Rooppur Nuclear Power Plant project is Tk 1,14,225 crore, with the majority financed by Russia.
Revision comes due to slow project implementation
Bangladesh and India began a two-day meeting to review Indian-funded projects, which have been running behind schedule.
The test run may start by the end of 2025 after a year's delay as the gridline on the Padma river is taking longer than anticipated to materialise
