The Centre for Policy Dialogue (CPD) on Wednesday urged the newly elected government to enforce strict macroeconomic discipline and fast-track structural reforms.
It warned that without decisive policy action the ongoing recovery of Bangladesh’s economy could remain fragile amid persistent inflation, weak private investment and financial sector stress.
Presenting a paper titled “Bangladesh Economy: Trends, Challenges, and Policy Priorities for the Newly Elected Government” at a roundtable held at BRAC Inn Centre in the city, CPD Executive Director Dr Fahmida Khatun said the country stands at a ‘critical juncture’ as it prepares for LDC graduation in November 2026 and navigates a post-election transition.
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The event, titled “Looking into Bangladesh’s Development: Priority for the Newly Elected Government in the Short to Medium Term,” was organised by CPD.
According to the presentation, real GDP growth declined to 3.49 percent in FY2025 from 4.2 percent in FY2024, reflecting macroeconomic pressures and subdued investment.
However, growth rebounded to 4.50 percent in the first quarter of FY2026, up from 2.58 percent in the corresponding period a year earlier, indicating a gradual recovery in economic activity.
Inflationary pressure has eased somewhat.
Inflation fell to 8.66 percent in January 2026 from 9.7 percent in June FY2024, driven mainly by a slowdown in food inflation, which dropped to 7.79 percent.
However, wage growth remained stagnant at 8.12 percent in January 2026, continuing to exert pressure on household purchasing power, it said.
Private sector credit growth dropped to a record low of 6.10 percent in December 2025, underscoring persistent weakness in private investment.
In contrast, net government credit growth surged to 32.19 percent in December 2025, reflecting increased reliance on bank borrowing to finance fiscal needs.
Revenue mobilisation remains a major concern.
In FY2025, the tax-to-GDP ratio fell to 6.78 percent and the revenue-to-GDP ratio to 7.81 percent. At the same time, the total debt-to-GDP ratio increased to 38.61 percent, driven by rises in both domestic and external debt.
Besides, total revenue growth reached 17.74 percent during July-September FY2026, signalling a positive shift compared to the same period of the previous fiscal year.
Operating expenditure growth remained above 11 percent, while development expenditure showed volatility.
The paper highlighted growing stress in the banking sector.
The non-performing loan (NPL) ratio rose sharply from 12.56 percent in June 2024 to 35.73 percent in September 2025, largely due to the adoption of internationally aligned loan classification standards.
Although the NPL ratio declined to 30.60 percent in December 2025 following extensive loan rescheduling, CPD warned that underlying governance weaknesses need urgent attention.
Meanwhile, the advance-deposit ratio declined to 78.3 percent and the liquidity coverage ratio improved to 185.3 percent, indicating improved short-term liquidity conditions.
Export performance weakened during July-January FY2026, recording a negative year-on-year growth of 1.93 percent, mainly due to a slowdown in readymade garment shipments.
Import payments grew by 3.91 percent over the same period, driven primarily by higher imports of intermediate goods.
However, remittance inflows stood at $19.43 billion during July-January FY2026, marking a robust 21.76 percent year-on-year increase. Foreign exchange reserves provided 5.6 months of import cover as of December FY2026, with gross reserves reaching $30.36 billion as of February 26.
Fahmida outlined five broad policy priorities for the short to medium term—
1. Containing inflation: Ensure coordinated monetary and fiscal discipline, stabilise the exchange rate, address supply bottlenecks and expand targeted social protection.
2. Reviving private investment: Improve access to finance for productive sectors, invest in infrastructure and skills, ensure regulatory predictability and strengthen capital markets.
3. Strengthening fiscal discipline: Broaden the tax base, accelerate digitalisation of revenue systems, enhance tax administration and prioritise high-impact development spending.
4. Restoring banking sector confidence: Deepen financial sector reforms, resolve NPLs through time-bound strategies, safeguard the independence of the central bank and strengthen oversight and transparency.
5. Enhancing external resilience: Promote export diversification beyond readymade garments, provide targeted support to emerging sectors and proactively implement a smooth transition strategy ahead of LDC graduation.
CPD said that sustained macroeconomic discipline, institutional reforms and policy consistency will be critical to restoring investor confidence, safeguarding stability and steering Bangladesh towards inclusive and resilient growth in the coming years.