Bangladesh’s finance minister unveiled the country’s largest ever budget on Thursday, vowing to “accelerate” growth despite economic headwinds made worse by the Middle East war.
The conflict since late February, which erupted days after a new government took office in Dhaka, has taken a toll on state finances in the South Asian nation of 170 million people — the world’s second-largest garment exporter.
“That posed an unexpected threat to the economy,” Finance Minister Amir Khasru Mahmud Chowdhury said.
“The surge in fuel prices contributed to higher production costs in electricity generation, agriculture, transportation and industry,” he added, leading to greater “pressure on inflation and government subsidies”.
Bangladesh imports about 95 percent of its fuel requirements, with most coming from the Middle East.
The budget presented Thursday is the first by an elected government since a 2024 uprising overthrew longtime ruler Sheikh Hasina.
At $78 billion, it is significantly larger than the previous $65 billion budget of the interim administration.
As authorities struggle to tame stubborn inflation, which reached a 16-month high of 9.42 percent in May, the government set a target of bringing it down to 7.5 percent.
The government also expects economic growth of 6.5 percent — an ambitious goal, given that growth was 3.4 percent in 2024-2025, according to World Bank figures.
The economy has also been weighed down by slowing export growth, particularly in the ready-made garment sector, and unemployment.
Dhaka in March said it was seeking loans of around $2 billion from multilateral donors to tackle energy security concerns sparked by the surging fuel prices caused by the Iran war.
In May, the International Monetary Fund said it was in negotiations for a new assistance programme at Dhaka’s request.
Bangladesh is already in the middle of a $5.7 billion IMF programme, which began in 2023 and was due to run for four years.
Chowdhury said the economy faced multiple challenges caused by irregularities, weak management and corruption under the deposed “fascist government” of Hasina.
