Bangladesh government is preparing an ambitious Tk9.30 trillion budget for fiscal year 2026–27 despite mounting economic challenges, declining revenue collection and rising dependence on both domestic and foreign borrowing.
According to officials, the revenue target for the upcoming budget has been set at Tk6.95 trillion, while a significant portion of the remaining financing will come from loans. The government plans to secure Tk110,000 crore through foreign borrowing and Tk119,000 crore from domestic sources, alongside an additional Tk44,000 crore in anticipated budget support loans.
Sources at the Economic Relations Division (ERD) said the foreign borrowing target is the highest in Bangladesh’s history, reflecting growing fiscal pressure and widening funding gaps.
Economists warned that rising debt servicing obligations are becoming a major concern. ERD data shows Bangladesh will need to repay nearly $26 billion in foreign loans between FY2025–26 and FY2029–30, including over $7.6 billion in interest payments.
At the same time, revenue collection continues to fall behind targets. According to the National Board of Revenue (NBR), the revenue shortfall during the first eight months of the current fiscal year reached nearly Tk98,000 crore.
Government borrowing from the banking sector has also accelerated sharply. Data from Bangladesh Bank shows the government borrowed nearly Tk109,000 crore from banks during the first nine months of the fiscal year, already surpassing the annual borrowing target.
Analysts cautioned that excessive public borrowing could reduce private sector credit flow, negatively impacting investment, employment and overall economic growth.
Meanwhile, Bangladesh’s total external debt has now exceeded Tk23 trillion, while uncertainty remains regarding the next tranche of the International Monetary Fund (IMF) loan program due to slow reform progress.
Economists including Mustafizur Rahman of the Centre for Policy Dialogue warned that Bangladesh must avoid falling into a debt trap by strengthening revenue mobilization and implementing structural economic reforms.
Experts also expressed concern that rising subsidy costs, increasing interest payments, expanding social safety programs and future pay structure pressures could widen the budget deficit further and intensify macroeconomic risks in the coming years.
