The FY2025-26 budget took a cautious, reform-minded approach. At Tk 7.9 lakh crore, it is about Tk 7,000 crore smaller than the prior year. The deficit is set around 3.6% of GDP, reflecting a move toward fiscal consolidation in the face of inflation and limited fiscal space. Notably, development spending was cut (ADP down ~13%) while revenue targets rose by ~4.25%. The revenue-to-GDP ratio remains low (under 8%), so the government has proposed modest tax reliefs (e.g. slightly higher personal exemptions). Critics point out this relies heavily on indirect taxes, which do little to ease inflation’s impact. The budget’s success will hinge on broadening the tax base and reducing wasteful subsidies, as the IMF recommends a “revenue-based fiscal consolidation” and subsidy rationalization. Ensuring that essential services and human capital spending are protected will also be key to maintaining long-term growth and social stability.