The interim government is set to unveil the national budget for the 2025-26 fiscal year (FY26) tomorrow, with a likely outlay of Tk7.9 lakh crore, The proposed budget is expected to prioritise social equity through an expansion of welfare schemes, though economists have already raised alarms over probable cuts to education and healthcare sectors.

This will be the first budget under the interim administration and is anticipated to be more restrained than the current year’s Tk7.97 lakh crore budget – down by an estimated Tk7,000 crore.

Despite limited fiscal space, the government appears poised to emphasise support for the country’s most vulnerable. However, preliminary figures suggesting reduced allocations for health and education have prompted sharp criticism from experts, who warn such measures could undermine long-term development.

Welfare expansion amid fiscal constraints
A central element of the upcoming budget is expected to be the expansion of social safety nets aimed at easing the strain of inflation on low-income groups. 

The Old Age Allowance programme will likely cover 61 lakh beneficiaries – one lakh more than this year – with monthly payments set to increase from Tk600 to Tk650.

Support for widows and women abandoned by their husbands is also expected to rise to 29 lakh recipients (from 27 lakh), with stipends increasing to Tk650 from Tk550. The Disability Allowance may go up to Tk900 per person, reaching 34.5 lakh individuals – an increase from 33 lakh. 

Marginalised groups are also likely to benefit. The number of Bede recipients may rise from 10,898 to 11,988, while those receiving special allowances could increase from 5,600 to 6,160. All are expected to receive Tk650 monthly.

 
The Hijra community will reportedly also receive the revised amount, though the number of recipients is unlikely to change.

In a significant policy revision, tea garden workers – previously given a one-time Tk6,000 grant – may now receive Tk650 monthly, with the number of beneficiaries potentially more than doubling from 60,000 to 1.37 lakh. 

The maternity and child support programme is also expected to expand, with monthly payments increasing from Tk800 to Tk850 and coverage growing from 16.55 lakh to 17.71 lakh families.

Tk1,500cr proposed for July uprising victims
In what could be a landmark move, the FY26 budget is expected to propose Tk1,500 crore for families affected by the historic July uprising. 

This fund would cover one-time grants, monthly honoraria, free medical treatment both at home and abroad, and employment-focused training.

Plans reportedly include constructing flats in Dhaka’s Mirpur area for 834 gazetted martyr families and over 12,000 injured individuals, with a tentative allocation of Tk761 crore. 

Each martyr family may receive a one-time Tk30 lakh grant. Injured individuals are expected to be categorised and compensated accordingly: Tk20,000 (Category A), Tk15,000 (B), and Tk10,000 (C) per month. Those not falling into any of these categories may receive a one-time assistance of Tk2-3 lakh.

The initiative, to be implemented by the proposed Department of the July Uprising under the Ministry of Liberation War Affairs, will reportedly include vocational training, lifelong healthcare, and free education for dependents – a major step towards state recognition and long-term rehabilitation.

Economists offer cautious praise, critical warnings
“This budget is not about lofty promises but achievable welfare,” said Finance Adviser Dr Salehuddin Ahmed. “It’s designed to improve livelihoods, not inflate numbers. Growth should be equitable, not just numerical.”

However, Dr Zahid Hussain, former lead economist at the World Bank’s Dhaka office, urged greater fiscal caution. 

He recommended a more modest budget of around Tk7.2 lakh crore to avoid inflationary financing and prevent private sector credit from being crowded out.

“Without meaningful tax reform and realistic revenue targets, expanding welfare will strain the system,” he warned. “The math won’t add up unless structural changes are made.”

These concerns point to the fundamental challenge facing the FY26 budget: how to deliver inclusive growth while remaining within the bounds of economic reality – particularly with proposed cuts to key human development sectors.

Education and health cuts raise red flags
While the focus on welfare has been largely welcomed, experts are concerned about the reported deprioritisation of human capital investment. 

The education budget under the Annual Development Programme (ADP) is expected to be reduced by Tk2,971 crore, bringing it down to Tk28,557 crore. Health sector funding may also decline by Tk2,534 crore, totalling Tk18,148 crore.

In contrast, infrastructure remains a high priority, with tentative allocations of Tk58,973 crore for transport and communication, and Tk32,392 crore for power and energy.

“Cutting education and health now is a serious misstep,” said Dr Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM) and former director general of the Bangladesh Institute of Development Studies (BIDS). 

“It’s a missed opportunity to shift away from infrastructure-heavy development and invest in people,” he added.

According to World Bank data, Bangladesh ranks among the bottom ten countries in education spending as a percentage of GDP. In healthcare, it spends just $58 per capita – well below the World Health Organization’s recommended $88, with much of that amount coming from out-of-pocket expenditure.

Planning ministry officials have defended the anticipated cuts, citing implementation challenges, fiscal constraints, and declining donor contributions.

A delicate balancing act
The overall Annual Development Programme is expected to shrink from Tk2.65 lakh crore to Tk2.3 lakh crore. The projected budget deficit stands at Tk2.26 lakh crore, or 3.62% of GDP – down from the current year’s Tk2.56 lakh crore.

The government has projected a GDP growth rate of 5.5%, slightly higher than the current 5.25%. However, international institutions such as the IMF and ADB expect growth to remain below 5%, pointing to continued inflationary pressure and low private investment.

Inflation, currently around 9.7%, is targeted to fall to 6.5%. The Finance Division aims to achieve this by stabilising the supply of essential commodities like rice, lentils, soybean oil, and fertiliser.

Projected revenue collection is likely to reach Tk5.18 lakh crore – up from Tk4.8 lakh crore this year, though it falls short of the IMF’s Tk5.8 lakh crore target. Non-development expenditure is expected to rise to Tk5.6 lakh crore, up by Tk28,000 crore. Subsidies and incentives are projected to dip slightly, from Tk1.2 lakh crore to Tk1.16 lakh crore.

Although the welfare-oriented focus is commendable, economists caution that its effectiveness will ultimately depend on execution and structural reform.

“Inclusive growth cannot exist without quality education and accessible healthcare,” Dr Mujeri reiterated. “We are treating symptoms, not building resilience.”