Finance and Planning Minister Amir Khosru Mahmud Chowdhury said on Sunday the government is moving towards market-based and alternative financing while reducing reliance on bank borrowing, arguing that excessive state borrowing from banks puts pressure on private sector investment.

He made the remarks at a budget review dialogue in Dhaka organised by the Centre for Policy Dialogue, noting that steps to reduce reliance are included in the 2025–26 and 2026–27 budgets.

“I’ve been saying for 10 years that the government shouldn’t borrow excessively from domestic banks,” he said. “When the government takes money at 10 to 13 percent interest, it becomes difficult for the private sector to survive, and the question of how such expensive loans will be repaid looms large.”

The current FY26 budget will spend about BDT 1.25 trillion on interest payments, he said, limiting the government’s fiscal space. The budget was prepared in about one and a half months instead of the usual six, and the government inherited arrears from the previous administration, including about BDT 5 billion in unpaid electricity bills.

The minister said the government wants to transfer cash directly to housewives or eligible family members through family cards, without intermediaries. He said the mechanism recognises women’s domestic labour and is intended to strengthen social resilience, not only serve as financial assistance. Direct support for disabled people and food-security measures for farmers are also being expanded.

Despite constraints, education spending is set at 2 percent of GDP, with a target of raising it to 5 percent, he said. Preventive healthcare is being prioritised to reduce households’ out-of-pocket medical costs, alongside emphasis on skill development, reskilling and new skills creation.