FY27 budget to be placed in JS today
The newly elected government is set to propose an expansionary budget for the 2026-27 financial year today, targeting higher spending to spur economic growth and accommodate various demands, including pay hikes for public employees, election pledges and energy subsidies.
The Bangladesh Nationalist Party-led government, which assumed office on March 17, will present its first budget of the current tenure.
According to finance ministry officials, a budget outlay of Tk 9.38 lakh crore is likely to be announced for FY27, which is 18.73 per cent higher than the Tk 7.9 lakh crore budget for FY26 set by the interim government.
The interim government, installed after the ouster of the Awami League regime in a mass uprising in August 2024, kept the budget Tk 7,000 crore lower than the previous one.
Referring to previous instances, the officials said that budget increases had typically ranged from 10 to 15 per cent over the years.
Finance and planning minister Amir Khosru Mahmud Chowdhury, who will place the new budget in the Jatiya Sangsad, has already said that his government envisages higher spending to address an economic downturn marked by low growth, falling private investment, rising poverty and weak wage growth amid inflation of over nine per cent over the past three years, as well as regional conflicts and domestic political transition.
Out of the planned outlay for FY27, the government has already decided to implement a development budget of Tk 3 lakh crore, which is Tk 1 lakh crore higher than the revised annual development programme for FY26.
This will leave the finance ministry to accommodate pay hikes for public employees, cash assistance through family cards, farmer cards and health cards, as well as interest payments, administrative costs and incentives, within Tk 6.38 lakh crore, known as the non-development budget.
Finance ministry officials estimated that an additional Tk 35,000 crore would be required to implement a 50 per cent pay hike for public employees, Tk 1.16 lakh crore for energy subsidies and Tk 1.27 lakh crore for interest payments on government borrowing over the years.
Of the possible fiscal measures to generate overall revenue of about Tk 6.95 lakh crore, including Tk 6.04 lakh crore through the National Board of Revenue, the finance minister is likely to announce a series of measures, including expanding the business identification number holder base by bringing informal traders into the formal system.
Giving importance to tax compliance, the finance minister may also propose requiring a taxpayer identification number to open bank accounts from the next financial year beginning on July 1.
A mandatory TIN requirement for registering motorcycles with engine capacities exceeding 150cc and a 15 per cent tax hike on tobacco retailers may be announced.
The finance minister may also propose continuing the surcharge on wealth to generate more revenue, while raising the income tax threshold to provide relief to low-income groups.
Calling the planned revenue generation target ambitious against the backdrop of chronic shortfalls, economists said that the budget deficit of Tk 2.43 lakh crore might eventually rise, forcing higher government borrowing and crowding out the private sector.
Former World Bank Dhaka office chief economist Zahid Hussain said that the planned revenue generation target was highly ambitious, posing challenges to the implementation of the overall budget.
Finance ministry officials said that the minister might propose borrowing Tk 1.16 lakh crore from foreign sources and the remaining Tk 1.27 lakh crore from domestic sources to meet the deficit financing needs in FY27.
