Despite recent signs of macroeconomic stabilisation, Bangladesh’s economy remains mired in deep-rooted structural challenges.
At a recent event hosted by the Policy Research Institute (PRI), leading economists offered a sobering assessment of the country’s fiscal and financial health.
Their message was clear: stabilisation is not recovery, and without bold reforms, the progress made thus far may prove fragile.
Key concerns raised include subdued growth, a persistently high inflation rate, and rising fiscal risks.
Private credit growth remains slow, investment as a share of GDP is falling, and capital machinery imports — a bellwether of future productivity — have declined.
The banking sector, long plagued by governance issues and non-performing loans, continues to underperform. Without decisive reforms, the sector’s fragility could undermine broader economic stability.
One of the most urgent priorities is tax reform. Bangladesh’s tax-to-GDP ratio remains among the lowest in the region.
Expanding the direct tax base, curbing corruption within the National Board of Revenue (NBR), and ensuring a clear separation between tax policymaking and implementation are vital steps.
Allegations of tax waivers in exchange for bribes are deeply concerning and must be addressed with seriousness and transparency.
Additionally, experts called for phasing out export subsidies, improving the implementation of the Annual Development Programme, and restoring the autonomy of the Bangladesh Bank.
A recurring theme was the need for continuity in policy implementation — particularly in restoring good governance in the financial sector over the next one to three years. This, of course, hinges on political will and stability.
There is also a pressing need to diversify Bangladesh’s export base. While the readymade garments (RMG) sector remains a mainstay, overreliance on labour-intensive exports leaves the economy vulnerable to external shocks and shifts in trade policy.
Securing favourable trade agreements, especially with the United States, and moving up the value chain are essential to safeguarding long-term competitiveness.
Notably, the keynote presentation projected a 22.9 per cent poverty rate for the current year — a sharp rise from 18.7 per cent in 2022.
This statistic underscores the economic vulnerability of large segments of the population. A mere 10 per cent decline in income could plunge an additional 10 per cent of citizens into poverty.
Bangladesh stands at a crossroads. Incremental adjustments will no longer suffice. What the country needs now is a bold, integrated reform agenda — one that addresses the root causes of its fiscal and financial vulnerabilities while laying the foundation for inclusive, resilient growth.
