The interim government plans to present a ‘controlled’ budget due to resource constraints and economic crisis. Sources confirmed that the upcoming budget (2025-26) will not be increased much to restore normalcy in the macro economy.
A source in the Finance Division said that allocation in the non-development and development budget may see a decrease in next budget.
Earlier this month, a meeting of the Budget Management and Resource Management committee was held at the secretariat under the leadership Finance Adviser Dr Salehuddin Ahmed.
A source in the meeting informed that the interim government is facing crisis recovering from the raffle in the economic sector.
Source added on the one hand, financial crisis and on the other hand, the macroeconomic state has shifted towards imbalance amid economic reform efforts.
“Again, the burden of foreign debt has increased at an abnormal rate while the foreign assistance has been strained.”
“The revenue collection has been decreased; leading to a revenue deficit of Tk 30,000 crore has been created,” source continued.
“The budget implementation has also slowed down.”
“Amid such turmoil in the financial sector, the interim government has started the initial activities of formulating the budget for the new 2025-26 fiscal year,” he said.
An unnamed source from Finance Division said: “To curve the inflation rate and to restore balance in macro economy, the government is planning for a ‘controlled’ budget for the 2025-26 fiscal years.”
He said: “For this, the reins of public sector spending are also being tightened. Along with this, the International Monetary Fund (IMF) has suggested tightening the reins of development spending for the time being.”
He explained how it will work in reducing the inflation rate, saying: “This will reduce the cash flow in the market. The IMF and the Finance Division believe that this will play a proactive role in controlling inflation.”
“The country’s economy has already slowed down which affects the investment and employment sector,” he added, and warned that the statuesque may continue for two more years.
Therefore, the GDP growth could drop to 3.8 percent by the end of this year. However, the IMF has predicted that this will see an uptrend again after two years.
For this reason, a plan is being made to improve the stagnant economic situation with a ‘controlled’ budget for the time being. However, the IMF believes that it will not be possible to control inflation if the liquid money flow in the market cannot be reduced. Therefore, it has been asked to give the highest priority to controlling inflation at the moment, the official continued.
Sources said that the budget size for the upcoming fiscal year 2025-26 has been initially estimated at 8 lakh 50 thousand crore taka, which is 6.3 percent more than the budget for the current fiscal year (2024-25). In addition, the GDP growth target in the upcoming budget may be set at 5.5 percent and inflation at 7 percent. And the budget for the Annual Development Program (ADP) could be about 2 lakh 70 thousand crore taka. The main ADP budget allocation for the current fiscal year is 2 lakh and 65 thousand crore taka.
The finance and planning ministries were asked to prepare the budget after discussing with various ministries and departments. At the same time, instructions were given to increase the allocation to the health and education sectors in the budget, source wishing to be unnamed continued.
“The interim government believes that Sheikh Hasina’s led government has increased the budget size of without emphasizing efficiency and capacity in implementing the budget every year, setting records in terms of budget size alone.”
In comparison, the size of the budget in the next fiscal year is not increasing much.
However, the Finance Adviser Dr Salehuddin Ahmed has taken the initiative to revise the budget of the current fiscal year ahead of time.
Translated by Afsar Munna
