Bangladesh orders reduced govt spending amid economic vulnerability

Dhaka, Jul 9 (PTI) Bangladesh on Thursday ordered austerity measures including cuts in government spending, procurement of motor vehicles, air and water craft and foreign trips by its officials as the nation faces persistent inflation and slower growth amid continued crisis in West Asia. The development comes as major lending agencies including the World Bank (WB) and the Asian Development Bank (ADB) lowered their earlier projections on expected growth rate in 2026-2027 fiscal. As the nation is exposed to persistent inflation, slower growth and a distressed banking system, “the measures are aimed at ensuring the proper use of limited public resources, bringing inflation to a tolerable level and maintaining macroeconomic stability,” a Finance Division official said. The official said a circular detailing the directives has been issued. He said Prime Minister Tarique Rahman’s government enforced the restriction as part of its efforts to contain inflation and maintain macroeconomic stability by “prudent use of limited public resources.” “The restrictions will apply to the operating and development budgets of all government ministries and agencies, autonomous bodies, state-owned enterprises, statutory organisations, public sector corporations, state-owned companies and financial institutions,” the official said. The government last month set its gross domestic product (GDP) growth target at 6.5 per cent for 2026–2027, which was, however, described by independent financial analysts and multilateral organisations as “highly ambitious” in view of current structural challenges. The ADB, in its latest projection on Wednesday, cut its forecast of Bangladesh GDP to 4.5 per cent in 2026 over energy, banking sector concerns against its earlier projection of 4.0 per cent. The WB originally forecast Bangladesh’s growth at 4.6 per cent but has since revised it downward twice -- first to 3.9 per cent in April 2026, and to 3.8 per cent in June 2026. Both lenders attributed the slowdown to high inflation affecting consumer spending, stressed banking sector and weak financial governance, subdued private investment stemming from lingering political uncertainties alongside international turmoil over war on Iran resulting in rising energy subsidy pressures. PTI AR NPK NPK