The new government has assumed office amid a challenging macroeconomic environment and must address three major issues to deliver on its election pledges, according to the Centre for Policy Dialogue (CPD).
Speaking at a media briefing held at the Brac Centre Auditorium in Mohakhali on Thursday, CPD Research Director Taufiqul Islam Khan said the government would need to tackle the fragile stability of the economy, stagnation in investment and employment, and a narrow revenue base.
The observations were presented in an analytical report titled "Macroeconomic Benchmarks for the New Government" at an event organised by the Citizens' Platform for SDG Implementation, Bangladesh.
Three major macroeconomic concerns
According to CPD, although global inflation has been declining, its impact in Bangladesh remains limited. Persistently high non-food inflation continues to put pressure on people’s real income.
Despite some improvement in foreign exchange reserves, concerns remain over the sustainability of this stability amid rising import demand and increasing commercial debt repayment obligations.
The report also noted that stagnation in private investment and employment has worsened the situation. In FY2025, private investment fell to 22.5% of GDP—the lowest in recent years—while GDP growth was limited to 4%. An estimated 2.1 million people lost their jobs in the first half of the fiscal year.
Fiscal pressure has also intensified, making it increasingly difficult for the government to meet operational expenses through domestic revenue. As a result, reliance on new borrowing to service existing debt has grown, while Annual Development Programme (ADP) spending declined in FY2025 and FY2026.
Policy recommendations
To address the challenges, CPD proposed a set of policy measures, including a marginal reduction in the central bank’s policy rate to curb inflation, improved foreign exchange reserve management, gradual exchange rate adjustment, rationalisation of export and remittance incentives, and austerity in government expenditure.
The recommendations also include listing loss-making state-owned enterprises on the stock market and strengthening legal and diplomatic efforts to recover laundered money and defaulted loans.
Election pledges under scrutiny
The report reviewed 10 key commitments in the government’s election manifesto. While achieving a $1 trillion GDP by 2034 was termed “achievable,” targets such as raising revenue collection to 15% of GDP and foreign investment to 2.5% of GDP were described as “extremely ambitious.”
Researchers said ensuring allocations of 5% of GDP to the health and education sectors would require strong political will and major reforms in the revenue structure.
The report also highlighted potential fiscal liabilities arising from compensating depositors of closed or merged Islamic banks, estimating an annual requirement of around Tk20,000 crore.
Call for realistic budgeting
CPD recommended formulating a realistic revised budget for FY2025, alongside establishing a credible fiscal framework for FY2027 and adopting a medium-term reform program.
It warned that failure to implement these measures could prolong macroeconomic vulnerabilities.
Economists, researchers, policymakers and media representatives attended the event.
