With the country still under interim rule and no sitting parliament, the FY26 budget will be implemented via a presidential ordinance.

The interim government of Bangladesh on Sunday, 22 June, passed a BDT 7.9 lakh crore national budget for the fiscal year 2025–26, marking the first budget under the non-partisan administration that assumed office following the ousting of the Awami League government in August 2024.

In a meeting chaired by Chief Adviser Professor Muhammad Yunus at the Chief Adviser’s Office in Tejgaon, Dhaka, the Advisory Council approved the fiscal plan, introducing a number of significant changes. Chief among these was the removal of the controversial provision allowing legalisation of undisclosed money in the real estate sector — a move the government said was taken on moral grounds rather than in response to public criticism.

Refocused fiscal priorities

Finance Adviser Salehuddin Ahmed, who first presented the budget proposal on 2 June in a televised address in the absence of a sitting parliament, formally disclosed the revised measures at a press briefing on Sunday afternoon.

He emphasised that the FY26 budget reflects a departure from the politically motivated spending patterns of previous regimes, describing it as “the lowest budget deficit in a decade” at 3.62% of GDP, with a more restrained Annual Development Programme (ADP). The GDP target for FY26 has been set at 5.5%, with projected inflation at 6.54%.

The total revenue target is set at BDT 5.64 lakh crore, with the National Board of Revenue (NBR) expected to collect BDT 4.99 lakh crore, 36.5% of which is anticipated to come from income tax. To meet the budgetary shortfall, the government aims to borrow BDT 96,000 crore from external sources and BDT 1.25 lakh crore domestically.

Tax and tariff reforms

Among the fiscal changes approved:

  • Import duties on solar power equipment have been slashed from 10% to 1% in a move expected to promote renewable energy adoption.
  • Heart rings and eye lenses will be exempt from import duties in FY26.
  • Income tax rates on real estate transactions — including land and flat sales — have been reduced to 5%, 3%, and 2%, down from 8%, 6%, and 4% respectively, to support the sector following the removal of the money whitening facility.

Although real estate developers had lobbied hard to retain the previous legalisation provision for undeclared investments in property, the council rejected this. Instead, a more limited facility was introduced, allowing taxpayers to declare previously undisclosed legally sourced income with a 10 per cent penalty on the highest applicable tax rate.

Support for public servants

In a move aimed at providing some relief amid inflationary pressures, the budget also increased minimum special incentives for public officials to BDT 1,500 (from BDT 1,000) and for pensioners to BDT 700 (from BDT 500).

Rising debt concerns

The budget announcement comes against a backdrop of rising debt obligations. According to the Economic Relations Division, foreign debt repayments surged by 23.4% year-on-year, reaching USD 3.784 billion in the first 11 months of FY25.

Ordinance to enforce the budget in the absence of parliament

With the country still under interim rule and no sitting parliament, the FY26 budget will be implemented via a presidential ordinance. The interim government has pledged transparency and fiscal discipline as it steers the nation toward democratic elections expected in early 2026.

Finance Adviser Ahmed described the new budget as a “corrective step” away from excessive reliance on debt and politically motivated expenditure, laying the groundwork for economic stabilisation and institutional reform.

Earlier, Bangladesh’s interim government advisory council approved the 2025-26 national budget on 2 June 2025.