REJAUL KARIM BYRON and WASIM BIN HABIB

The budget for 2026-27 fiscal year is likely to exceed the Tk 9,00,000 crore mark, as the government moves to fulfil its electoral pledges, partially implement recommendations to raise salaries of its employees, and shield the economy from the fallout of the ongoing Middle East conflict.

The preliminary framework for the budget is expected to be finalised at a high-level meeting chaired by Finance Minister Amir Khosru Mahmud Chowdhury today.

The original budget for the ongoing 2025-26 fiscal year was Tk 790,000 crore, which was later revised down to Tk 788,000 crore with sharp cuts in development spending but higher allocations for subsidies and non-development expenditure.

The new administration is preparing a significant expansion, with preliminary proposals reaching Tk 920,000 crore, marking one of the largest budget increases in recent history.

“This budget carries special weight as it is this government’s first. It will signal the administration’s priorities and lay the financial groundwork for delivering on its five-year commitments,” said a senior finance ministry official, requesting anonymity.

The planned expansion is largely driven by increased expenditure commitments, particularly in public sector salaries, subsidies and social protection, alongside the need to cushion external shocks from the US-Israel war on Iran.

The interim government had prepared a revised budget for this fiscal year and a draft proposal for the next, but the BNP government is introducing significant changes to both, finance ministry officials said.

Despite the ambitious expansion, revenue collection is unlikely to meet its target.

The revised budget had set revenue target at Tk 588,000 crore, including Tk 503,000 crore from the National Board of Revenue -- projections that officials acknowledge will fall short. The revenue collection target for the next fiscal year may be raised to Tk 650,000 crore.

Although the deficit target had been set at 3.3 percent of GDP in the revised budget, weak revenue performance and rising expenditure are likely to push it beyond 4 percent, putting further strain on fiscal management in the coming year.

The deficit for the next fiscal year is expected to be set at around 5 percent of GDP.

The interim government had set a GDP growth target of 5 percent and an inflation target of 7 percent in the revised budget. The new administration is likely to retain the growth target while revising inflation target upwards to 8 percent.

For the next fiscal year, the government is expected to set a higher GDP growth target of 6.5 percent and bring inflation down to 7 percent, banking on the assumption that the US-Israel war on Iran will not persist.

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