In a historic departure from tradition, Bangladesh’s interim government has unveiled a national budget of Tk 7.90 lakh crore for the financial year 2025–26 — marking the first-ever reduction in the absolute size of the national budget.

The proposed allocation is 0.9 per cent lower than the previous fiscal year’s outlay of Tk 7.97 lakh crore, breaking a trend of continuous budget growth that has persisted since 1972.

The proposed national budget for FY26, announced on June 2 via a pre-recorded speech by finance adviser Salehuddin Ahmed, comes as the country grapples with domestic and global economic challenges.

Emphasising a shift towards people-centric development, Salehuddin said that infrastructure growth would no longer be the sole focus.

Instead, the budget gives priority to education, healthcare, employment and governance, with the government aiming to lay a stronger social foundation.

The focus also includes preparing for the Fourth Industrial Revolution, navigating post-LDC graduation and confronting climate change risks.

Despite the smaller size, the government has set an ambitious 5.5 per cent GDP growth target. However, this optimism is tempered by projections from global institutions, which estimate growth will remain below 5 per cent.

The budget-to-GDP ratio has dipped to 12.65 per cent, the lowest since FY2010–11.

Meanwhile, the budget deficit has been trimmed to Tk226,000 crore, with plans to bridge the gap using foreign assistance, domestic borrowing, and national savings instruments.

This marks the second year in a row where the budget increase has deviated from the usual 10–12 per cent growth pattern — raising questions about the long-term direction of fiscal policy.