Govt’s Fiscal Deficit Crosses Tk 1.0 Trillion in 11 Months of FY’25

Rising operating costs, food imports drive up spending; new allowances to add more pressure

Aug 30, 2025 2 min read

Bangladesh’s fiscal deficit surged past Tk 1.0 trillion in the first 11 months of FY 2024-25, fueled mainly by ballooning operating costs and a sharp rise in food imports, according to Finance Division data.

The deficit stood at Tk 1.06 trillion during the July–May period, marking a 42 per cent jump from the same period a year earlier.

Spending surge outpaces revenue growth

During the review period, the government’s total expenditure stood at Tk 4.92 trillion, of which Tk 3.93 trillion came from operating expenses alone — up 21.5 per cent year-on-year.

By contrast, total revenue earnings reached Tk 3.87 trillion, reflecting a modest 10 per cent rise. This left a widening fiscal gap despite steady inflows of foreign grants. Bangladesh received Tk 34.37 billion in grants, almost unchanged from the previous fiscal year.

Officials noted that with large payments due in June, the final deficit for FY’25 is expected to climb further.

Food imports weigh heavily

Food imports, particularly rice, soared in the aftermath of three consecutive floods. Import costs during July–May FY’25 were 86 per cent higher than in the same period a year earlier, significantly straining the budget.

How the deficit was financed

Of the overall shortfall, Tk 916.76 billion was financed through domestic sources — largely bank borrowing — while Tk 145.71 billion came from foreign sources.

Within operating expenses, subsidies, incentives, and current transfers consumed Tk 1.78 trillion, while interest payments totaled Tk 1.13 trillion.

New allowance adds future burden

Finance Division officials cautioned that operating costs would increase further following the rollout of a new dearness allowance (DA) for government employees and pensioners effective July 1, 2025.

Under the new scheme, grades 1–9 employees receive a 15% DA, and grades 10–20 employees 20%, replacing the existing 5% special incentive. The move, intended to ease inflationary pressure, is expected to cost the government around Tk 70 billion annually.