A Simple Guide to Bangladesh's National Budget (FY2026-27)

What is a National Budget?

Think of a national budget like your household budget, but for an entire country. Just as you plan how to spend your pocket money or salary each month, the government creates a yearly plan for the whole nation. This plan shows how much money the government expects to get and how it will spend that money over the next year (called a fiscal year). The budget is not just a paper document—it is the government's main tool to keep its promises, run the country, and work toward national development.

The Three Main Parts of a Budget

1. Revenue (Money Coming In) This is all the money the government collects. The biggest source is taxes, such as income tax (paid by workers) and VAT (added to goods and services). Taxes are like the government's salary—they pay for almost everything. The government also earns money from non-tax sources, like fees for passports, profits from state-owned companies, and other charges.

2. Expenditure (Money Going Out) This is how the government spends its money. It has two main categories:

• Operational Costs: Daily expenses to keep the country running, such as paying salaries to teachers, doctors, and police, providing pensions to retirees, and maintaining schools and hospitals.
• Development Costs: Money spent on big, long-term projects that build the future, such as new highways, bridges, power plants, and railways. These create jobs today and make the country stronger tomorrow.

3. Deficit or Surplus If the government plans to spend more than it earns, it faces a deficit. It must then borrow money from domestic banks or foreign countries—just like taking a loan when your expenses exceed your income. If it earns more than it spends, it creates a surplus, which can be used to pay off old debts or save for future emergencies.

Why Does the Government Make a Budget?

• To focus money on key areas: The budget directs funds to essential public services like healthcare, education, and defense, which private businesses cannot always provide properly.
• To reduce inequality: By taxing the rich more and using that money for food aid, scholarships, and housing for the poor, the budget helps close the gap between rich and poor.
• To keep the economy stable: During slow economic times, the government spends more or cuts taxes to boost jobs. During high inflation, it spends less or raises taxes to cool things down. This protects people from extreme ups and downs.

The Budget Cycle (Step by Step)

1. Planning (Formulation): Months before the budget is announced, all ministries estimate their needs and send requests to the Finance Ministry. They argue for more funds, and the Finance Ministry puts everything together into one final proposal.
2. Approval: The draft budget goes to Parliament, where elected members debate it, ask questions, and suggest changes. After full discussion, they vote to approve it.
3. Execution: After approval, the government starts collecting taxes and spending money as planned. The Finance Ministry keeps an eye on progress all year long.
4. Auditing: After the year ends, independent auditors check whether the money was spent properly. They look for waste or misuse. This step ensures transparency and builds public trust.

Bangladesh's FY2026-27 Budget at a Glance

On June 11, 2026, Finance Minister Amir Khosru Mahmud Chowdhury presented this year's budget. It is the first budget of the newly elected BNP government. Here are the key numbers:

Aspect	Details
Total Budget Size	Tk 9.38 lakh crore (19% bigger than last year)
Deficit	Tk 2.43 lakh crore (3.6% of GDP)
GDP Growth Target	6.5%
Inflation Target	Bring down to 7.5%

The government will borrow money from domestic banks and international partners to cover the deficit.

What Ordinary Citizens Get from This Budget?

• Tax Relief: The tax-free income limit has been raised from Tk 3,50,000 to Tk 3,75,000. The government plans to increase it further to Tk 4,00,000 in the coming years. This helps low- and middle-income earners.
• Cheaper Daily Food: The tax on rice, wheat, potatoes, and onions has been cut from up to 5% down to just 0.5%. This will lower food prices for every family.
• Affordable Healthcare: The budget removes customs duties on heart stents, dialysis filters, and cataract lenses. It also raises tax-free limits on bank savings kept for medical needs, making life-saving treatment cheaper.
• Transport Benefits: Citizens above 65 years get free train travel. Metro rail fares now have a 50% subsidy for all commuters.
• Green Vehicle Policy: Taxes on petrol and diesel cars are increased to discourage pollution. At the same time, taxes on electric vehicles (EVs) are reduced to promote cleaner options.

Where Is the Budget Spending the Most?

• Annual Development Programme (ADP): Tk 3 lakh crore (4.4% of GDP) is set aside for major infrastructure like roads, power, and digital networks.
• Social Safety Nets: Tk 1.44 lakh crore (13.9% more than last year) goes to support widows, the elderly, disabled persons, and the extreme poor.
• Job Creation: The government aims to create 1 crore (10 million) new jobs, with special focus on youth, entrepreneurs, and skill development.
• Corporate Tax: Business tax rates remain unchanged to give companies a stable environment for investment.

Default Loans in Bangladesh: A Simple Overview

What Are Default Loans? Default loans are borrowed money that has not been repaid to banks on time.

Three Key Numbers You Should Know

Category	Amount (Taka)
Top 11 to 120 defaulter conglomerates	Over Tk 10,000 crore (Tk 1 trillion)
Default loans linked to Members of Parliament (MPs)	Tk 11,117 crore
Total non-performing loans (NPLs) in all banks	Tk 5.88 lakh crore

Making Sense of These Numbers

1. Big Defaulters vs. MPs

• The top defaulters owe over Tk 10,000 crore.
• MPs and their businesses owe about Tk 11,117 crore.
• These two amounts are almost equal to each other.

2. The Whole Banking System

• Across all banks, the total default loans are Tk 5.88 lakh crore.
• This is much, much larger than the amounts owed by top defaulters or MPs.

Comparing with the National Budget (FY 2026-27)

Now let's see how these loan figures relate to the country's budget:

Budget Item	Amount (Taka)
Targeted Revenue Collection	Tk 6.95 lakh crore

• The total default loans (Tk 5.88 lakh crore) is:
  • About 63% of the total budget (Tk 9.38 lakh crore)
  • About 85% of the government's target revenue (Tk 6.95 lakh crore)

Default loans in Bangladesh are a huge problem. The total bad loans (Tk 5.88 lakh crore) are almost as big as the entire national budget. Even the loans linked to top businessmen and MPs (over Tk 10,000 crore) are significant, but they are just a small part of the bigger crisis. If these loans were recovered, the government could fund many development projects without borrowing more money.

Current Economic Challenges

Despite good plans, Bangladesh still faces several tough problems:

• High inflation: Rising prices make daily life hard for ordinary people.
• Slow growth: The economy is not expanding as fast as before.
• Weak private investment: Businesses are hesitant to grow, which limits new jobs.
• Poor tax collection: The government repeatedly fails to meet its revenue targets.
• Banking troubles: Many banks have too many bad loans and cash shortages.
• Power and fuel shortages: Lack of energy hurts factories and daily activities.

The Big Picture: GDP and the Future

Bangladesh's economy has now crossed a major milestone. According to the Bangladesh Bureau of Statistics, the country's Gross Domestic Product (GDP) has reached about USD 501 billion. This places Bangladesh in the "half-a-trillion-dollar" economy club.

What is GDP in simple words? GDP is the total value of everything produced and all services provided inside the country in one year. Think of it as a big report card that shows how large and healthy the economy really is.

Why does this USD 501 billion GDP matter for the budget?

• A bigger economy means more tax money for the government to fund its plans.
• The budget deficit (3.6%) and the growth target (6.5%) are both calculated based on this GDP size.
• The main goal of this budget is to use spending on roads, health, and jobs to grow the GDP even more next year.

Bangladesh's Economy at a Glance

Bangladesh's economy is now worth $501 billion. Among the three main sectors, the services sector is the biggest contributor to this total.

Sector-wise Breakdown of GDP

Sector	Share of GDP	Approximate Value
Services	~51%	US$255.5 billion
Industry	~37%	US$185.4 billion
Agriculture	~12%	US$60.1 billion

Understanding Each Sector in Simple Words

1. Services Sector (~51%)

• This is the largest part of the economy.
• It includes businesses like shops, transport, banks, real estate, and government offices.
• In short: it covers all kinds of services people use every day.

2. Industry Sector (~37%)

• This sector makes things.
• It includes factories (especially the ready-made garment industry), construction, and utilities like electricity and water supply.
• This is the backbone of Bangladesh's exports.

3. Agriculture Sector (~12%)

• This sector grows food.
• It includes farming, livestock, fishing, and forestry.
• Although its share in GDP is smaller, it is very important because:
  • It provides food for the whole nation.
  • It gives jobs to a huge number of people.

In a Nutshell

Services are the biggest money earner, industry drives exports and jobs, and agriculture feeds the nation. Together, they make up Bangladesh's $501 billion economy.

Final Thought This budget is big and full of good intentions, but a budget is only as good as its execution. Without honest governance, proper oversight, and strong reforms, even the largest plan can fail. The coming year will test if Bangladesh can turn this financial roadmap into real progress for its people. Success depends on cooperation between the government, businesses, and citizens—and the chance to build a stronger, more inclusive future is now within reach.

Writer: Professor, Department of Economics, Bangladesh University of Business and Technology