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On June 11, Finance Minister Amir Khosru Mahmud Chowdhury is set to present the first national budget of the Bangladesh National Party (BNP)-led government, elected in February. At roughly USD 76 billion, the FY2026-27 plan is expected to be among the largest single-year expansions, nearly 18 percent above the current year. However, the budget will arrive amid acute economic strain; the government took office on February 17, and within two weeks U.S. strikes on Iran plunged the fuel-import-dependent economy into an energy and fiscal emergency.

The budget framework was established through Finance Division planning and the development program that the National Economic Council (NEC) approved on May 18, signaling the government’s priorities — and its constraints — ahead of the speech. The government has outlined a major increase in social spending, but its revenue base is among the weakest in Asia, and the war has driven up the subsidy bill. The budget is expected to grow sharply while the government’s actual capacity to pay for it has not, with a reliance on continued borrowing to fill the gap.

KEY TAKEAWAYS

• The development program prioritizes education and health. The NEC approved a USD 24.6 billion Annual Development Programme (ADP) for FY27, up 30 percent from the current year. Education and health together are set to make up more than a quarter of the allocation — a combined USD 6.9 billion, which would align with the BNP’s pledge to raise spending in each to 5 percent of GDP.
• The health increase points to a bigger procurement pipeline. Recent budgets have put health money into new hospitals and medical colleges, cancer and burn units, dialysis centers, and diagnostic labs. If the near-tripling of the Health Services Division allocation holds, it would likely translate into materially higher demand for medical equipment, diagnostics, and imaging over the coming year.
• Energy subsidies are hindering new power capacity. The government has budgeted ~USD 3 billion for electricity subsidies and another ~USD 0.5 billion for LNG, while cutting the Power Division’s development allocation to USD 1.6 billion. With LNG shipments from Qatar and Oman disrupted, Dhaka has bought on the spot market at roughly two-and-a-half times the usual price. Investments are being funneled to keep existing plants running instead of enabling new generation capacity.
• Defense spending is anticipated to see a modest increase. The budget is expected to allocate roughly 1–1.2 percent of GDP (~USD 2.2 billion) toward defense, focused on gradual modernization and capability-building rather than large-scale expansion.
• The budget is expected to depend heavily on borrowing. Against a revenue target of almost USD 57 billion — of which the National Board of Revenue (NBR) would raise about USD 50 billion — the deficit runs close to USD 19 billion, split evenly between domestic and external borrowing. However, the NBR is already running its largest-ever shortfall, ~USD 8 billion in the first nine months of the current year, which casts doubt on the revenue plan.
• Businesses and households can expect some targeted relief. The government is likely to cut advance income tax on imported raw materials and essential goods, a measure Prime Minister Tarique Rahman has approved in principle, and to expand the Family Card cash-transfer scheme to 4.1 million households at a cost near USD 1 billion. It is targeting GDP growth of 6.5 percent and inflation within 8 percent — both of which assume the U.S.-Israel war with Iran is not prolonged.

WATCHPOINTS

The budget is shaped by an inherited fiscal weakness, along with the external pressure of the global energy shock. What stands out is the deliberate hedge on social spending. The proposed allotments could create a near-term opening in health and education procurement. However, Bangladesh’s health and education ministries routinely fail to spend what they are allocated. At the current year’s mid-point, their development budgets were cut by 74 and 55 percent on grounds of underspending. Businesses pursuing the social-sector opportunity should track tendering and disbursement over the first two quarters.

Energy is the swing factor for the entire budget since the growth and inflation targets depend on the conflict easing. If it does not, the deficit is likely to widen further, deepening the subsidy overrun, and load-shedding could start to hit industrial users — a direct risk to the ready-made garment (RMG) sector that drives Bangladesh’s exports. The government’s development program indicates priorities for private capital with more than 1,200 new projects, of which 80 would be public-private partnerships and 148 under the climate-change trust fund, and a newly approved five-year reform framework.

Least Developed Country (LDC) graduation remains a key structural inflection point. Bangladesh is scheduled to graduate from LDC status in November 2026, which would phase out preferential tariff access — particularly impacting the RMG sector — unless a requested three-year deferral is approved later this year. The outcome will likely shape the urgency of export support and competitiveness measures within the budget cycle.

While the budget offers a starting point, success will depend on whether energy costs come down, the revenue plan holds up, and allocations translate into execution.