The process of preparing the new budget for the 2025-26 fiscal year has begun, with controlling inflation being the primary focus. Furthermore, the Ministry of Finance has advised prioritizing three additional key areas: implementing reform initiatives, addressing post-graduation challenges after transitioning from the Least Developed Country (LDC) status, and ensuring macroeconomic stability. The upcoming budget, the first under the interim government, is expected to include distinct measures to reduce inequality, departing from the conventional budgetary framework.
Recently, the Ministry of Finance instructed all relevant ministries, departments, and agencies to consider these priorities while preparing the budget. Specific information and statistical reports from the concerned authorities must be submitted to the ministry by March 15. This information was obtained from ministry sources.
The initial estimate for the 2025-26 budget stands at BDT 8.3 trillion (830,000 crore). The Finance Adviser, Dr. Salehuddin Ahmed, recently presented the draft outline of income and expenditure based on this estimation to the Chief Adviser, Professor Muhammad Yunus, who approved the proposed framework.
In a letter from the Finance Division, relevant officials were informed that the upcoming budget will emphasize measures to restore macroeconomic stability and accelerate socio-economic development. Additionally, the budget will prioritize good governance, inclusive growth, poverty alleviation, reducing inequality, women’s empowerment, climate change initiatives, and reform policies and actions.
The budget proposal will also reflect strategies to address post-LDC graduation challenges. In the budget, the affiliated areas of each department should also be kept in consideration
According to sources, the Ministry of Finance has requested data to assist in drafting the 2025-26 budget and to document the ongoing and future activities of the interim government. This data will highlight major policies, laws, and plans implemented during the current 2024-25 fiscal year and outline the government's policy and reform initiatives.
The budget will focus on medium-term action plans and reform programs. Economists note that Bangladesh's macroeconomic stability is under significant pressure, particularly due to high inflation, which has severely affected people’s living standards. Given the current situation, restoring economic stability is of utmost importance. Additionally, the budget should prioritize protecting vulnerable groups. Increasing revenue collection is crucial, as higher revenue will reduce the government's dependence on loans.
By reducing dependence on bank loans, the government’s essential expenditures can be met through revenue collection. The current government has emphasized reducing wasteful spending. The upcoming budget should have more specific measures. Special attention must be given to revitalizing the private sector to help increase people's incomes amid inflationary pressures. That is why attention must be given to increasing investment and employment in the next budget.
At an event on February 17, Dr Salehuddin said that a lot of changes would be visible in the next fiscal year’s budget. However, he did not explain what those changes would be.
Dr. Mustafizur Rahman, a distinguished fellow at the research organization Centre for Policy Dialogue (CPD), said, “In the upcoming budget, priorities must be given to investment and employment. At the same time, We must also pay attention to adjusting our economy following the LDC graduation”
He also said, “Economic reforms should be given special importance in the new budget. In this case, it is necessary to make a change in our tax structure to enhance the capacity of the private sector. Indirect tax is very high in our country. It is necessary to change this trend and emphasize more on direct tax.”
He also added, “Our development budget is fully dependent on loans. Such a financing structure is not sustainable. Especially as the burden of foreign debt is increasing, posing risks to the future economy. Considering all these aspects, the upcoming budget must be prepared.”
Priority on Inflation Control: The government wants to reduce the average inflation rate to 6.5% in the next fiscal year(2025-26). That is why Therefore, cost-saving measures in public spending will continue in coordination with a contractionary monetary policy. Cautions will be exercised when implementing projects.
According to data from the Bangladesh Bureau of Statistics (BBS), Over the last two and a half years, the overall inflation in the country has remained above 9%.
Courtesy- Kaler Kantha
(Translated and edited by Rafid)
