STAR BUSINESS REPORT

A widening revenue shortfall is driving the government toward heavy bank borrowing, raising concerns over tighter credit availability for the private sector and mounting fiscal pressure in the coming years, the Bangladesh Economic Association (BEA) said.

“If the revenue gap persists, the trend [of government bank borrowing] could deepen further in FY2026-27, amplifying a ‘crowding out’ effect where government demand for funds limits lending space for businesses,” said the association.

The economists’ body raised the issue yesterday during a pre-budget discussion with the National Board of Revenue (NBR) officials at its headquarters in Dhaka.

BEA estimates that government borrowing from banks may reach around Tk 1 lakh crore in FY26. The amount could rise to Tk 1.1 to 1.3 lakh crore in FY27, with the deficit remaining at 4.5 to 5 percent of GDP.

As of February in the current fiscal year, the government borrowed Tk 88,309 crore from the banking system and Tk 4,033 crore from non-banking sources, according to Bangladesh Bank data.

The BEA also said the upcoming budget will face pressure from political commitments, including pay-scale adjustments, family card programmes, agricultural support, and social safety-net expansion.

“Ensuring food security and stabilising prices of essential goods will further strain fiscal space,” said Mohammad Masud Alam, member of the BEA.