BNP govt heads towards new budget amid economic challenges

Bangladesh is moving towards the formulation of its 2026 national budget while facing unprecedented pressure from a dollar shortage, high inflation, weaknesses in the banking sector and global economic uncertainty.

The country is grappling with these multifaceted macroeconomic challenges in one hand; on the other, it must maintain the momentum of remittance inflows, export growth, and infrastructure development. The economy now stands at the intersection of these competing realities.

According to economists and analysts, this year's budget is not merely a routine annual financial plan. Rather, it represents a major test of the country's ability to restore economic stability, rebuild confidence and sustain future development.

Over the past several years, the economy has been pushed to the brink by the aftereffects of the COVID-19 pandemic, the war in Ukraine, rising global energy prices, and weaknesses in the domestic financial sector.

The International Monetary Fund (IMF) believes that although Bangladesh's economic growth has slowed in recent years, a gradual recovery remains possible. According to IMF projections, the country's GDP growth could reach 4.7 per cent in fiscal year 2026. However, the IMF has warned that persistently high inflation, weak revenue collection, and accumulated risks within the banking sector remain major challenges.

At present, inflation is the greatest concern for ordinary citizens. Rising prices of food, transportation, fuel, and other essential goods have placed significant pressure on low- and middle-income households. IMF estimates suggest that inflation could remain at a relatively high level of around 8-9 per cent during fiscal year 2026.

Recent increases in fuel prices have also raised concerns about additional pressure on transportation and production costs.

Economists believe the government's budget priorities this year will focus on three key objectives: controlling inflation, creating employment opportunities, and increasing revenue collection. To achieve these goals, substantial allocations may be proposed for infrastructure, power and energy, education, healthcare, and social safety net programs. There is also growing public pressure on the government to expand food assistance and subsidies for lower-income groups.

The banking sector remains a significant source of concern due to rising non-performing loans, severe liquidity shortages and governance weaknesses. The IMF has stressed that restoring financial stability will require comprehensive banking reforms, including improved asset evaluations, greater transparency, and stronger oversight by the central bank.

At the same time, while major infrastructure projects such as the Padma Bridge, Metro Rail, and Rooppur Nuclear Power Plant have strengthened the country's development capacity over the past decade, the burden of repaying foreign debt is steadily increasing. According to various international estimates, Bangladesh's external debt has already surpassed $100 billion. Although the debt-to-GDP ratio remains below critical risk levels, effective debt management will be an important challenge in the years ahead.

As the budget approaches, the public's questions are straightforward: Will market prices come down? Will employment opportunities increase? Will incomes and living standards improve?