What to anticipate from the FY26 budget and its presentation format?

Anticipations for the FY26 Budget and Its Presentation

Finance Adviser Dr. Salehuddin Ahmed is set to present the national budget for the 2025-26 fiscal year through a televised address, as the country currently lacks a political government and a functioning parliament, officials confirmed. Traditionally, finance ministers of political governments present the budget in parliament, but this will not be possible this year. The last time a budget was presented via a televised address was during the 2007-08 caretaker government.

The budget, expected to be around Tk8,50,000 crore, will be announced through a presidential ordinance in early June, before the Eid-ul-Azha holiday.

Key Features of the Upcoming Budget

• The budget will incorporate recommendations from the government’s white paper committee on the economy and task force.

• Subsidies for agriculture, fertilizers, and electricity will continue.

• The budget speech is expected to be concise, spanning 50-60 pages, and will emphasize a business-friendly tax regime.

• Inflation, which has remained high for over a year, is targeted to be reduced to 7%.

• The GDP growth projection for FY 2025-26 is set at 5.5%.

• The budget deficit is expected to remain below 5% of the GDP.

Budget Drafting Process

Work on drafting the budget speech has commenced. In February, Finance Secretary Md Khairuzzaman Mozumder requested all secretaries to submit proposals for inclusion in the budget speech.

• Ministries, divisions, and agencies were instructed to detail key policies, laws, plans, and reform initiatives from the current fiscal year.

• The speech will also highlight achievements of the interim government.

• Strategies to address post-LDC graduation challenges will be outlined.

Inflation and Budget Deficit

• The government aims to reduce inflation to 7% in the upcoming budget.

• The deficit for the current fiscal year was set at Tk2,56,000 crore (4.6% of GDP).

• The FY 2025-26 budget deficit is expected to remain below 5% of GDP.

• The GDP growth target for FY 2025-26 is 5.5%, with the current fiscal year’s target revised downward to 5.25%.

• However, estimates from the World Bank, IMF, and ADB project GDP growth below 5% for this year.

Sectoral Priorities

The upcoming budget is expected to prioritize allocations for:

• Health

• Education

• Information technology

• Social security

Revenue Collection and ADP Expenditure

• In the first six months of FY 2024-25, only Tk40,000 crore was spent under the Annual Development Program (ADP) against an allocation of Tk2,65,000 crore.

• The National Board of Revenue (NBR) collected Tk1,59,015 crore in the first five months, against an annual revenue target of Tk4,80,000 crore.

• To boost revenue collection, VAT and duties on over 100 products and services were increased in January.

Budget Size and Future Plans

• The original FY 2024-25 budget was Tk7,97,000 crore but was later revised to around Tk7,50,000 crore.

• The FY 2023-24 budget was Tk7,61,785 crore, later reduced to Tk7,14,418 crore.

• This year’s budget is expected to be smaller, with no major new projects introduced.

• Ongoing large projects will continue to receive funding, but the ADP size will be reduced.

• Key challenges for the FY 2025-26 budget include controlling inflation and increasing employment.

• The government aims to implement a business-friendly tax system while ensuring a realistic budget that lays a foundation for the next administration, avoiding populist measures.