Multiple Pressures on Economy: Government Struggles to Rein in Spending

Economic Desk

Despite announcing austerity measures, the government is unable to rein in government spending. As a result, financial pressure is increasing. Although instructions were given to cut spending at the beginning of the 2025-26 fiscal year, there is no real change in reality. People’s lives are becoming increasingly difficult. Business and commerce are at a standstill.

On the one hand, subsidies are increasing, while on the other hand, expensive allowances for government employees, new MPO-listed educational institutions, and the increased pressure of debt repayment have increased the financial burden on the government.

According to the Finance Department, the amount of foreign debt repayment is going to almost double in the current fiscal year. Although there has been some progress in revenue collection, it is not enough to meet the total demand. Additional allocations are also being made for training, purchase of election equipment, and security expenses, focusing on the upcoming national elections.

Initiatives have been taken to revise the budget to bring government spending under control. Preparations are underway to revise the budget in December instead of March.

The total expenditure in the current budget is estimated at 7 lakh 90 thousand crore taka. Out of this, 84 thousand 684 crore taka is allocated for salaries and allowances of government officials and employees. But the expenditure in this sector may increase further due to the provision of special financial benefits. From July, 10 percent of the basic salary of employees from grade-1 to 9 and 15 percent special benefits from grade-10 to 20 have been given. At the same time, the risk allowance of police members has been increased by 20 percent, which will increase the expenditure by an additional 100 crore taka.

In addition, 1,519 new madrasas have been registered under MPO. Teachers and employees registered under MPO are demanding an increase in house rent and medical allowance. There is also a movement demanding nationalization. This is also increasing financial pressure on the education sector.

The foreign allowance of officials working in foreign missions has been increased from 20 to 33 percent and the training allowance of government employees has been doubled. The pressure has increased further due to the payment of Tk 62,000 crore in arrears of subsidies to the power sector.

The Finance Department said that work is underway to prioritize spending and identify areas where savings can be made. Plans have also been made to further reduce the development budget.

Financial Advisor Dr. Salehuddin Ahmed said, “In the current financial situation, budget revision in December has become essential. It has become difficult to control expenditure due to subsidies and additional benefits. With elections coming up, the need for additional money has increased even more.”