In Greek myth, Sisyphus heaves a boulder uphill with all his labour and focus, only to see it roll back down by day’s end. Finance ministers in developing countries confront a fate of the same kind. The myth is now a powerful metaphor for budget management across the developing world — a reality in which structural constraints, debt overhangs, institutional frailties and global uncertainty devour the gains of unrelenting effort. In this sense, the budget is less an income-and-expenditure statement than a “Sisyphus syndrome” of trying to meet boundless needs with scant resources.

For developing-country budgets, the Sisyphean challenge means a relentless struggle to generate growth, cut poverty and advance social development. Fresh crises, structural fragilities and external shocks repeatedly erode much of what is achieved.

One root of this cyclical distress is the chronic mismatch between revenue and expenditure. Most developing nations operate with a narrow tax base, weak tax administration and a vast informal sector that lies outside the tax net. At the same time, demands for spending on education, healthcare, social protection, infrastructure and employment rise without pause. Government revenue consistently falls short of need, turning the budget deficit into a permanent fixture.

To close the gap, governments borrow from domestic and foreign lenders. Debt may initially fuel development, but the weight of interest and principal repayments mounts over time. Rising global interest rates or adverse currency swings can rapidly worsen the strain. Governments then spend a growing share of the budget servicing old loans rather than investing in new infrastructure, education or health. This squeezes the resources available for development, and the economy locks into a debt cycle.

Global shocks pose another structural threat to budget management in developing countries. Spikes in global fuel and food prices, imported inflation, supply-chain ruptures, geopolitical conflict, war or even a global recession can swiftly wreck a developing country’s fiscal plans. Climate-driven floods, droughts, cyclones and other natural disasters likewise compel governments into unbudgeted spending, derailing pre-set allocations.

A sprawling informal economy compounds the problem. Vast numbers of earners and enterprises operate beyond the formal system, narrowing the tax net. That weakens revenue forecasting and injects persistent uncertainty into both the design and execution of the budget.

Currency depreciation inflicts acute strain on economies hooked on imports and external borrowing. A falling local currency inflates the cost of imported goods, fuel and raw materials, while the burden of servicing foreign debt climbs at the same moment, forcing governments into harsh trade-offs — cutting development outlays, levying fresh taxes or racking up even more debt.

Bangladesh’s economy now shows many of these symptoms. It was against this unforgiving macroeconomic backdrop that Finance Minister Amir Khasru Mahmud Chowdhury presented a BDT 9.38 trillion budget for the 2026–27 fiscal year in Parliament on June 11. The budget is styled as a journey towards a democratic, humane and inclusive economy. The largest in the country’s history, it equals 13.7 percent of GDP and is BDT 1.48 trillion larger than the outgoing 2025–26 fiscal year’s budget.

Against that big spending envelope, the government has projected revenue of BDT 6.95 trillion. The National Board of Revenue is expected to collect BDT 6.04 trillion of the sum, with the remaining BDT 910 billion coming from other sources. The deficit stands at BDT 2.43 trillion — 3.6 percent of GDP. To cover the shortfall, the government intends to raise BDT 1.27 trillion from domestic sources and BDT 1.09 trillion from foreign lenders. The banking sector would supply BDT 1.12 trillion of the domestic portion.

In his budget speech, the finance minister set out a three-step “Three R” strategy for rebuilding the economy: “Recovery and Stabilisation, Restoration, and Reconstruction for Acceleration”.

The first phase, a short-term one-year effort, aims to arrest economic erosion and restore macroeconomic stability. The second, a medium-term three-year phase, would reform the revenue structure, restructure the banking and financial sector, and diversify exports. The final phase, spanning the next five years, envisages full reconstruction through structural transformation, innovation-driven growth and sustainable infrastructure.

The proposed budget targets inflation of 7.5 percent and GDP growth of 6.5 percent for the coming fiscal year. The finance minister also set longer-term goals: bringing inflation down to 5 percent and lifting growth to 8.5 percent by 2030-31. Over the same period, he aims to push foreign direct investment to 2.7 percent of GDP and total investment to 40 percent.

Dr Selim Raihan, executive director of the South Asian Network on Economic Modelling, told Bonik Barta that the budget speech acknowledged high inflation, taka’s depreciation, the strain of fuel and import costs, banking-sector weakness, and a stall in investment. “In this reality,” he said, “contractionary monetary policy alone won’t curb inflation; the government must manage food supply, market oversight, imports, energy prices and exchange-rate stability simultaneously.”

To lift growth, Dr Raihan added, private investment, industrial production, exports, credit flow and infrastructure delivery all need urgent acceleration. “Here lies the core contradiction. Controlling demand to tame inflation risks choking growth; raising spending and credit to propel growth could reignite inflationary pressure.” Uncertainties over the Middle East, energy imports, remittance flows and foreign-exchange reserves further complicate the outlook. The 7.5 percent inflation and 6.5 percent growth targets, Raihan said, are “achievable but highly ambitious. If policy coordination falters, the actual numbers risk missing the mark.”

The budget allocates BDT 3.16 trillion to development spending and BDT 6.21 trillion to operating and other expenditure. The finance minister wants to lift the development share from the current revised 27.27 percent to 33.7 percent in FY 2026–27, and trim the operating share from 72.73 percent to 66.3 percent. Interest payments alone will consume over BDT 1.27 trillion next fiscal year — BDT 1.05 trillion on domestic debt and BDT 225 billion on foreign loans.

“The proposed budget gives the highest priority to ensuring social protection for marginal and low-income groups to achieve development goals,” the finance minister said in his budget speech. “The annual development programme prioritises education, health, science, research and technology — essential for human resource development and a knowledge-based society — and also attaches special importance to the physical infrastructure required for investment and sustainable development.”

The allocations bear this out. Social infrastructure receives BDT 2.79 trillion, or 29.74 percent of the total. Physical infrastructure gets BDT 1.74 trillion, 18.66 percent, and general services BDT 2.45 trillion, 26.13 percent.

To restore macroeconomic stability, the minister said, the government is giving priority to taming high inflation. He blamed supply-chain disruptions, cartels, monopolies, extortion during goods transport and the malpractices of middlemen.

Overhauling the revenue system to raise domestic receipts is one of the government’s main objectives, Chowdhury said, adding that tax policy and revenue administration would be separated and new tax policy would be drafted with input from specialists.

“We’ve moved to separate revenue policy from revenue management, and tax policy will be formulated with tax experts,” the finance minister said. Under the government’s medium-term revenue strategy, he said, the tax base would be widened, the tax administration made more efficient, and transparency and accountability strengthened.

To lift collections, the government would widen the tax net, fully digitise tax registration and return filing, and intensify technology-driven surveillance to curb evasion and avoidance. It would also modernise VAT administration, sharpen the effectiveness of tax deduction at source and introduce risk-based audits. Taxpayer services would be expanded, the tax code simplified and voluntary compliance encouraged to build confidence in the revenue authority, according to the minister.

Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, told Bonik Barta that revenue mobilisation posed a formidable challenge in the budget. The target for the current fiscal year will not be met, he said. Collecting BDT 6.95 trillion in the coming fiscal year would therefore require an exceptionally large leap in growth. “That’s the real challenge,” he said.

Rahman acknowledged the budget offers some relief on advance income tax, VAT and for consumers, while extending benefits to import-substituting and export-oriented industries to stimulate investment. But those measures, he warned, would make revenue collection even more difficult. He said the government’s four strategies — cutting tax exemptions, adopting a zero-tolerance stance on evasion, expanding the tax base, and deploying end-to-end automation and technology — had now become critical. “If we fail to implement these tax administration reforms, the government could slide into debt distress and set off a vicious cycle in the economy,” he said.

Widespread tax exemptions are bleeding the state treasury, the finance minister said, announcing that the government had begun rationalising tax breaks and curtailing SRO-based concessions. He also declared that parliamentary approval would become mandatory for any future tax rebates or exemptions.

Addressing Bangladesh’s credit rating, the minister said: “During the fascist government, corruption-ridden and unplanned projects, and the massive borrowing to fund them, put our debt sustainability at risk. We want to return from a ‘medium’ risk rating to ‘low’ risk. So we will keep the budget deficit at a tolerable level by raising revenue and restoring discipline in debt management.”

The finance minister said he expected to raise the efficiency of government spending. Delivering his budget speech, he said the government would prioritise infrastructure, education, health, energy, agriculture and employment-generating sectors, aiming to lift long-term productivity, create jobs and accelerate growth. In line with election pledges, education and health allocations would be raised progressively to 5 percent of GDP. Development projects would be screened for economic viability, cost-benefit analysis and implementation capacity to curb low-yield spending and secure return on investment and value for money.

The proposed budget allocates BDT 1.36 trillion to education, equivalent to 2 percent of GDP, up from BDT 872.06 billion in the current 2025–26 fiscal year. Health sector allocation was set at BDT 694.09 billion, or 1.02 percent of GDP, against a revised BDT 354.77 billion this fiscal year.

The finance minister identified improving the investment climate and restoring private sector confidence as a top priority of the government’s “Three-R strategy”. Legal and institutional reforms would strip away barriers to cut business costs and uncertainty, he said, and “ease of doing business” measures would secure investment. Integrated policies would be deployed to advance high value-added industry, technology-driven manufacturing and export-oriented services. The minister placed particular weight on deregulation, aiming to consolidate all investment services under one roof and slash bureaucratic hurdles, turning the state into a facilitator of production and employment. This, he forecast, would draw more domestic and foreign investment, revive industrial output and forge a cost-effective business-friendly environment.

Ahsan Khan Chowdhury, chairman and chief executive of Pran-RFL Group, described the budget as positive. “The government has given special attention to health, education and human resource development — essential for a nation’s sustainable development,” he told Bonik Barta. “The budget has placed particular emphasis on agriculture. The proposal to withdraw VAT at the import stage on raw materials for fertiliser, pesticide and insecticide production will help reduce farmers’ costs. The budget also offers concessional benefits on raw material imports for poultry, dairy and fisheries, which will spur growth in these sectors.”

He noted however that more funding was needed for research, modern mechanisation and agricultural technology.

Presenting the proposed budget to the Parliament, the finance minister identified financial sector reform as a central priority for economic recovery and sustaining investment flows. Restoring discipline in the banking and financial sector and rebuilding depositor confidence, he said, required cutting non-performing loans, ensuring transparent loan approval and rescheduling, and strengthening managerial accountability. To that end, the minister pledged to introduce risk-based supervision for weak banks, recapitalise and overhaul management where necessary, and reinforce the central bank’s oversight capacity. The government would also build a strong bond market and capital market — prioritising corporate bonds, mutual funds and sukuk — to reduce the economy’s reliance on bank lending.

Energy security and lower import dependence demanded the highest priority for source diversification and domestic gas exploration, the minister said. Uninterrupted power and energy supply hinged on efficiency gains across generation, transmission and distribution, alongside upgrades to the LNG delivery system. The government would also offer incentives to promote renewable energy.

Invoking the government’s “We will work, we will build the country” slogan, the minister said massive employment would be created in industry, IT and the creative economy. Good governance would be upheld through merit-based recruitment and promotion in the civil service, he added, and announced a phased new pay structure for government employees from July 1, 2026.

Developing Chattogram as the country’s commercial capital was a strategic priority, the finance minister declared, requiring the modernisation and expansion of its port. To achieve more balanced regional development, northern Bangladesh would pursue agriculture-based industrialisation, while the haor and baor wetland areas would see a multi-faceted plan for agriculture, fish farming, duck rearing, tourism and biodiversity conservation, Chowdhury noted.

The finance minister proposed allocating BDT 433.35 billion to the agriculture, food, fisheries and livestock ministries for the coming fiscal year. Social security spending was set at BDT 1.44 trillion, up from a revised BDT 1.26 trillion in the current fiscal year. The proposed budget earmarks BDT 895.38 billion for subsidies and BDT 160.25 billion for incentives, against revised figures of BDT 950.31 billion and BDT 152.25 billion respectively for the outgoing fiscal year.

Government borrowing — both domestic and external — is projected to cross BDT 26.33 trillion next fiscal year, split between BDT 15.02 trillion raised at home and BDT 11.31 trillion borrowed from abroad. The government must also repay $3.77 billion in foreign debt over the same period.

A medium-term macroeconomic policy statement published alongside the budget flagged the risk of a sharp energy price shock. A 30 percent surge in fuel costs next fiscal year would trigger severe disruption, it warned. Transport, agriculture and industrial production costs would spike, intensifying inflation and eroding purchasing power. The government would be forced to choose between a massive subsidy bill or raising retail energy and electricity prices — both outcomes squeezing the budget and the industrial sector. Losses at state-owned enterprises such as BPC, BPDB and Petrobangla would deepen, inflating contingent liabilities. Higher energy import costs would drain foreign exchange reserves, weaken the taka and widen the current-account deficit. Export competitiveness would erode, investment could stall and GDP growth risked faltering. A sudden oil price rise, the statement noted, could upend the government’s entire medium-term macroeconomic framework.