TDS Desk:

The government is facing mounting financial pressure as it struggles to curb public expenditure despite repeated commitments to austerity. Officials at the Finance Division say that although cost-cutting measures were announced at the beginning of the 2025–26 fiscal year, spending continues to rise across multiple sectors.

Growing subsidies, increased allowances for government employees, and new teacher enlistments under the MPO (Monthly Pay Order) scheme have pushed expenditure beyond projections. The burden of foreign debt repayments has also nearly doubled compared to last year. Although revenue collection has shown some improvement in the first quarter, it remains insufficient to meet the government’s swelling financial obligations.

With a national election approaching, additional spending on election preparations — including staff training, procurement of polling materials, and enhanced risk allowances for police personnel — has added further strain. Interest and principal payments on loans taken by previous administrations have compounded the problem, leaving the government struggling to manage its finances effectively.

In response, the government has initiated plans to revise the national budget earlier than usual. Typically adjusted in March, this year’s revision is expected by December to address emerging fiscal challenges. Ministries have already begun the process. Officials say that while efforts were made to limit spending targets, they are now being revised upward instead.

Although the development budget has been reduced significantly, Finance Adviser Dr Salehuddin Ahmed and Planning Adviser are reportedly preparing further cuts in development allocations. Holding a national election in February alone is expected to require an additional Tk3,000 crore, while the process of introducing a new pay scale for public servants is still ongoing.

This year’s national budget of Tk7.9 lakh crore includes allocations of Tk43,531 crore for salaries and Tk41,153 crore for allowances — a total of Tk84,684 crore.

However, recent financial benefits granted to public employees are expected to push this figure higher. Since July, government staff in grades 1–9 have been receiving a 10% additional allowance, while those in grades 10–20 have been given a 15% increase.

Police risk allowances have also been raised by 20%, adding another Tk100 crore to expenditure. At the same time, 1,519 madrasa institutions have been newly included under the MPO scheme, and enlisted teachers and staff are now demanding higher housing and medical allowances. Continuous protests by teachers seeking nationalisation have further intensified fiscal pressures.

In addition, training allowances for government officers have recently been doubled, and foreign allowances for diplomats have been raised by 20–33%. The government has also paid Tk62,000 crore in pending power subsidies, alongside substantial debt repayments.

Sources at the Finance Division say the government is reassessing its spending priorities and identifying potential areas for cost savings. The development budget is being further narrowed, and a revised fiscal framework is being prepared to accommodate necessary election and welfare expenditures without destabilising the economy.

“The current situation makes it essential to revise the budget by December,” Finance Adviser Dr Salehuddin Ahmed told reporters. “We have cleared Tk62,000 crore in overdue power subsidies, and repayments in other sectors are ongoing. However, the addition of new MPO-listed teachers and increased benefits for public employees have made spending difficult to contain. With the election approaching, an early budget revision is unavoidable.”