Bangladesh’s interim government has unveiled a cautious and reform-focused budget aimed at narrowing the fiscal deficit and boosting revenue, as the crisis-stricken nation strives to secure further support from the International Monetary Fund (IMF).
In the first budget under the leadership of Nobel laureate Muhammad Yunus, the government announced a deficit target of 3.6% of gross domestic product (GDP) for the fiscal year beginning July 1—down from 4.6% in the current year. This marks the narrowest fiscal gap since 2010-11, when the deficit stood at 3.8%.
Finance Adviser Salehuddin Ahmed presented the budget in a televised address on Monday, emphasizing the urgent need for fiscal discipline and economic stabilization. “We are navigating through a difficult period, facing tough challenges,” he said. “Without careful planning and advance preparation, we risk further instability.”
The total proposed expenditure has been trimmed slightly to 7.9 trillion taka, compared to 7.97 trillion taka in the current fiscal year. The plan focuses on enhancing government revenue through measures such as eliminating unnecessary tax exemptions and expanding the tax base.
“The budget’s focus is to increase government revenue while keeping public expenditure within a reasonable limit,” Ahmed stated.
The interim government’s fiscal tightening reflects its commitment to meeting the requirements of the IMF’s $4.7 billion loan program, under which $1.3 billion in aid remains undisbursed. The IMF has urged Bangladesh to implement structural reforms and maintain fiscal discipline as preconditions for further disbursements.
Bangladesh’s economic challenges are significant. The country is grappling with slowing growth, dwindling foreign exchange reserves, and rising debt. Debt servicing costs surged 25% year-over-year to $3.5 billion in the first 10 months of the current fiscal year, while the central bank’s foreign reserves stood at $22 billion in April—down from $24.7 billion two years ago.
The new budget comes at a critical time for Bangladesh, which has experienced political upheaval, including the departure of longtime Prime Minister Sheikh Hasina amid widespread protests and governance concerns. With investor confidence shaken and inflationary pressures mounting, the Yunus-led administration is betting on fiscal prudence to stabilize the economy and restore global credibility.
Economists say the reduced deficit and revenue-focused strategy are positive signals but stress the importance of execution. “The interim government is clearly trying to balance immediate macroeconomic needs with long-term structural reform,” said a Dhaka-based analyst. “But the effectiveness of these measures will depend on political stability and administrative capacity.”
As the fiscal year approaches, all eyes will be on how Bangladesh navigates its recovery path—and whether the IMF will greenlight the next tranche of funding.
