Bangladesh has proposed a record Tk9.38 lakh crore national budget for the financial year 2026-27, setting ambitious targets for revenue mobilisation, development spending and economic growth while projecting a fiscal deficit of more than Tk2.36 lakh crore.

Finance minister Amir Khosru Mahmud Chowdhury on June 11 presented the proposed national budget in Parliament.

Budget documents showed that the proposed budget, the largest in the country’s history, was about 19 per cent higher than the revised Tk7.88 lakh crore budget for FY 2025–26.

According to the budget documents, total government expenditure was proposed at Tk9,38,000 crore, while total revenue receipts, including foreign grants, were projected at Tk7,01,150 crore.

The resulting deficit was estimated at Tk2,36,850 crore, equivalent to 3.5 per cent of the country’s gross domestic product (GDP).

The government projected GDP at Tk68,30,024 crore for FY 2026-27, up from a provisional estimate of Tk60,80,320 crore for the outgoing fiscal year, indicating confidence in the country’s medium-term economic prospects.

The budget documents showed that operating expenditure would account for the largest share of spending at Tk6,05,740 crore, representing nearly 65 per cent of the total budget. Recurrent expenditure for routine government operations was set at Tk5,51,087 crore.

Interest payments were projected to reach Tk1,27,500 crore, including Tk1,05,000 crore for domestic debt servicing, reflecting the growing burden of public debt accumulated through past borrowing.

The government also proposed a substantial increase in development expenditure, setting the allocation at Tk3,16,075 crore, which represented a 47 per cent increase from the revised allocation of Tk2,14,862 crore in FY 2025-26.

The Annual Development Programme (ADP), the government’s principal development spending framework, was allocated Tk3,00,000 crore.

The allocation was more than double the actual ADP expenditure of Tk1,42,326 crore recorded in FY 2024-25 and signalled the government’s intention to accelerate investment in infrastructure, social services and economic development.

Economists were expected to question whether government agencies had the implementation capacity required to utilise such a large development allocation efficiently within a single fiscal year.

On the revenue side, the government set a target of Tk6,95,000 crore.

Of the total, Tk6,04,000 crore was expected to come from National Board of Revenue (NBR) taxes, Tk25,000 crore from non-NBR taxes and Tk66,000 crore from non-tax revenue, while foreign grants were projected at Tk6,150 crore.

The revenue targets highlighted a significant challenge, as actual revenue collection in FY 2024-25 stood at Tk4,37,029 crore against a budget target of Tk5,64,000 crore, resulting in a shortfall of more than Tk1.26 lakh crore.

The NBR tax target for FY 2026-27 would require an increase of around 64 per cent compared with the actual collection of Tk3,69,528 crore in FY 2024-25.

Analysts said that achieving the target would require major improvements in tax administration, expansion of the tax base and stronger measures against tax evasion.

To finance the budget deficit, the government said that it would rely on a combination of domestic and foreign borrowing.

Net foreign borrowing was projected at Tk1,09,850 crore, comprising gross foreign loans of Tk1,55,850 crore and debt repayments of Tk46,000 crore.

Net domestic borrowing was expected to amount to Tk1,27,000 crore.

Of this, Tk1,12,000 crore was projected to come from the banking system, while Tk15,000 crore would be sourced from non-bank instruments.

The government also planned to mobilise Tk8,500 crore through national savings certificates.

Economists have cautioned that heavy reliance on bank borrowing could put pressure on inflation and reduce the availability of credit for private-sector investment.

However, budget projections suggested that the government was shifting towards longer-term borrowing instruments, with net long-term domestic borrowing estimated at Tk1,18,000 crore and net short-term borrowing projected to decline.

The proposed budget reflected the government’s intention to maintain development momentum despite fiscal pressures.

However, its success would largely depend on whether revenue authorities could achieve the ambitious collection targets and whether government agencies could effectively implement the significantly expanded development programme.

Although the deficit-to-GDP ratio of 3.5 per cent remained within internationally accepted prudential limits, economists said that the growing interest burden and persistent revenue shortfalls were likely to remain key challenges for fiscal management in the coming years.